COMBank to raise Rs. 10 b via Basel III compliant debentures

Largest private sector player Commercial Bank PLC yesterday announced plans to raise Rs. 10 billion via a listed Basel III debentures.

Its Board of Directors yesterday resolved to issue 50 million listed, unsecured, rated, redeemable, subordinated Basel III compliant debentures of Rs. 100 each with a non-viability conversion feature for tenures of 5, 7 and 10 years with an option to issue up to a further 50 million debentures in the event of an oversubscription.

The move is subject to obtaining all necessary regulatory and shareholder approvals and provided other conditions are acceptable to the Bank.

Commercial Bank last had a Basel III compliant convertible debenture issue in September 2021. Plan was to raise a maximum of Rs. 10 billion and succeeded in raising Rs. 8.6 billion. The two options were a five-year fixed interest rate of 9% p.a. payable semi-annually and a seven-year fixed interest rate of 9.50% p.a. payable semi-annually.

In the first half of 2022 Commercial Bank Group’s gross loans and advances increased by Rs. 205 billion or 18.71% at a monthly average of Rs. 34 billion to Rs. 1.300 trillion while the growth of the loan book of the Group over the preceding year was Rs. 266 billion or 25.71%. Deposits of the Group recorded a growth of Rs. 284 billion or 19.30% in the six months to Rs. 1.757 trillion as of 30 June, recording a monthly average of Rs. 47 billion, while the YoY deposit growth was Rs. 352 billion at a monthly average of Rs. 29 billion.

The primary reason for the growth in both gross loans and advances and deposits was due to the sharp depreciation of the rupee against the dollar during the period under review.