BDO profit down 1.5% in first half of 2018

MANILA, Philippines — Earnings of Sy-led BDO Unibank Inc. declined by 1.5 percent in the first half due to the shift in the reporting standards with regards to its investments in its insurance arm, as well as the ongoing expansion of its thrift bank arm.

In a disclosure to the Philippine Stock Exchange (PSE), BDO said it posted a net income of P13.1 billion from January to June, about P200 million lower than the P13.3 billion registered in the same period last year.

BDO’s profit would have increased by 13 percent without the impact of the implementation of the Philippine Financial Reporting Standards (PFRS) 9 early this year on the investment portfolio of BDO Life and the ongoing expansion of One Network Bank (ONB).

In April, BDO president and chief executive officer Nestor Tan said the bank expects a 10.3 percent increase in net income to a record P31 billion this year from last year’s P28.1 billion despite the challenging and competitive operating landscape in the banking industry.

BDO said net interest income remained the major earnings driver, accelerating by 19 percent to P46 billion, driven by the hefty 20 percent jump in customer loans to P1.9 trillion on broad-based growth across all market segments.

The bank’s deposit base rose by 17 percent to P2.3 trillion, supported by the 14 percent hike in low-cost current and savings account (CASA) deposits.

Additionally, low-cost CASA funding combined with upward loan re-pricing due to rising interest rates resulted in net interest margins improving to 3.5 per cent from 3.43 per cent last year.

On the other hand, non-interest income declined two percent to P22.8 billion due to the unrealized mark-to-market losses on BDO Life’s portfolio.

Insurance premiums jumped by 23 percent to P5.6 billion, while fees and other income rose seven percent to P17.2 billion. Service charges and fees remained strong, but were tempered by weak underwriting and syndication activities in the capital markets.

BDO’s gross operating income went up 11 percent to P68.8 billion, while expenses increased 12 percent with the continued expansion due to the opening of 14 new branches as well as higher documentary stamp taxes (DST).