BPI income back on growth track in third quarter of 2018

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) booked a double-digit growth of 11.5 percent in net income to P5.98 billion in the third quarter from P5.36 billion in the same quarter last year, reversing the decline in the first and second quarters.

This brought the nine-month profit to P17.01 billion, almost unchanged from P17.05 billion in the same period last year. Revenue climbed 7.3 percent to P56.89 billion from P53.04 billion, while operating expenses rose 15.2 percent to P32.08 billion from P27.86 billion amid higher spending in manpower, premises and technology.

The net interest income of the 167-year old bank went up 15.1 percent to P40.88 billion from P35.5 billion due to the steady rise in average asset base as well as higher net interest margin.

Interest income from loans grew by 24.2 percent year-on-year amid the 37-basis points increase in the yield on interest-earning assets. The bank’s loan book grew 12.9 percent to P1.27 trillion from January to September this year.

The increase was partially offset by a 24-basis point increase in cost of funds due to higher time deposit rates and higher documentary stamp taxes (DST) on deposits under Republic Ac 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

On a quarter-on-quarter basis, net interest margin expanded by 14 basis points as a result of favorable loan repricing following the Bangko Sentral ng Pilipinas (BSP) policy rate hike earlier in the quarter.

The BSP has raised interest rates by 150 basis points since May to keep inflation expectations well anchored and at the same time boost the weakening peso.

On the other hand, total deposits inched up 2.5 percent to P1.54 trillion.

Year-to-date, the non-interest income of BPI slipped 8.7 percent to P16.01 billion from P17.54 billion due to higher fee-based income from its credit card, deposit and rental businesses.

However, BPI booked lower securities trading gains, trust and investment management fees, insurance income and asset sales.

The listed bank is nine months into its adoption of the PFRS 9 Expected Credit Loss models and reporting under BSP Circular 941. Provision for loan losses over this period total P2.84 billion.