BDO books P19.3-B income

MANILA, Philippines – Listed BDO Unibank Inc. (BDO), the country’s largest bank, booked a double-digit increase in earnings in the first nine months as its core businesses delivered solid results.

The bank owned by retail and banking magnate Henry Sy said its net income reached P19.3 billion from January to September, 10 percent higher than the P17.6 billion recorded in the same period last year.

BDO sees its net income climbing four percent to a record P26 billion this year from P25.05 billion last year on the back of a double-digit growth in earnings from core lending activities.

BDO said in a disclosure to the Philippine Stock Exchange (PSE) its core lending, deposit-taking and fee-based businesses delivered solid results in the first nine months.

The strong performance of its core businesses helped offset a more normalized contribution from treasury activities.

The bank’s net interest income rose 16 percent to P48.4 billion from P41.8 billion.

BDO’s customer loan portfolio expanded 15 percent to P1.4 trillion in the first nine months from P1.2 trillion in the same period last year on broad-based growth across all market segments.

Total deposits, on the other hand, rose 14 percent to P1.8 trillion from P1.6 trillion on the back of a 21 percent jump in low-cost checking and savings account deposits.

The fee-based service income of BDO increased 15 percent to P16 billion from January to September against P13.9 billion in the same period last year.

Volatility in the financial market pulled down the bank’s trading and foreign exchange income to P4.5 billion from P6.3 billion.

The Sy-led bank registered a 29 percent jump in operating expenses to P52.8 billion due mainly to the consolidation of One Network Bank (ONB) and BDO Life Insurance operations.

BDO remained prudent and set aside P2.6 billion in provisions even as asset quality held firm. Gross non-performing loan (NPL) ratio was steady at 1.3 percent, while NPL cover remained high at 143 percent.

The bank’s capital base went up 12.2 percent to P215.4 billion from P192 billion. Its Common Equity Tier 1 (CET1) and Capital Adequacy Ratio (CAR) remained well above the current regulatory minimum under the Basel III framework and the Bangko Sentral ng Pilipinas (BSP).

Last month, BDO raised $300 million from the issuance of fixed rate senior notes that fetched 2.63 percent, the lowest ever coupon rate for any US Dollar denominated bond for a Philippine issuer.

It also plans to raise another P60 billion in fresh capital through a stock rights offer to support its medium-term growth objectives amid the country’s favorable macroeconomic prospects.

The additional equity would provide a comfortable buffer over higher capital requirements with the forthcoming imposition of the domestic systemically important bank (DSIB) or too big to fail banks’ surcharge imposed by the BSP.