The Development Bank of the Philippines is embarking on a critical mission: to rebuild its financial foundation after a significant capital outlay. Bank President Michael O. de Jesus revealed plans to seek assistance from the central bank, requesting both dividend and regulatory relief to bolster its reserves.
At the heart of this effort lies the bank’s contribution to the Maharlika Investment Corporation, the nation’s sovereign wealth fund. DBP initially injected P25 billion into MIC, a substantial sum that has impacted its capital base and necessitates a strategic recovery plan.
This isn’t the first time DBP has sought such relief. For the past seven years, the bank has benefited from dividend relief, previously receiving exemptions in 2017 and 2022 – the latter granted through an executive order specifically to offset the MIC contribution. Typically, government-owned banks are required to remit at least half of their earnings to the national government.
The bank’s current total equity stands at approximately P97 billion, a rise from around P80 billion three years prior, but the loss to Maharlika remains a key concern. De Jesus emphasized the need to replenish these funds, framing the request for relief as essential for the bank’s continued stability and growth.
Despite a slow start to MIC’s investment activities, DBP remains optimistic. De Jesus expressed confidence in the team assembled at Maharlika, believing their pipeline of potential investments will eventually yield positive returns. He acknowledged the initial setup phase required considerable time and planning.
Looking ahead, DBP is requesting dividend relief for the next five to seven years, including the current year, alongside regulatory relief for 2025. The goal is to phase out regulatory relief within two years, demonstrating a commitment to long-term financial independence.
International observers, like the International Monetary Fund, have echoed the need for capital restoration at both DBP and Land Bank, urging a swift return to standard financial practices. The IMF stressed the importance of exiting regulatory relief “as soon as possible.”
Efforts are also underway to modernize DBP’s charter, potentially increasing its capital stock from P35 billion to P300 billion. This would provide greater capacity to finance crucial sectors like social infrastructure and support small businesses. A previous attempt to pass these amendments was vetoed, but a renewed push is planned.
The proposed charter changes also include provisions allowing for a limited public offering – up to 30% of shares – while maintaining the government’s majority ownership at 70%. Fitch Ratings believes these changes could significantly strengthen DBP’s financial position and credit profile.
Recent financial results show a decline in DBP’s net income, falling by over 51% in the first nine months of the year. The bank anticipates further reductions due to increased provisioning and delays in repayments from contractors impacted by an ongoing graft investigation. However, leadership projects a recovery by the first quarter of 2026.
