BDO recovers in 3rd quarter

MANILA, Philippines — Earnings of BDO Unibank Inc. (BDO) recovered in the third quarter, but the bank’s delinquency problem on loans has not yet peaked even if provisioning reached a record P23.83 billion from January to September, 5.6 times last year’s P4.25 billion due to the COVID-19 pandemic.

The bank’s net income inched up by 3.2 percent to P12.35 billion from July to September compared to P11.97 billion in the same period last year. BDO is the country’s largest bank.

“Despite BDO’s promising results, the bank recognizes that the pandemic difficulties still lie ahead,” the bank said in a disclosure to the Philippine Stock Exchange (PSE).

BDO pointed out the delinquency problem on loans has not yet peaked, interest rate caps on credit cards would be instituted soon and there are added costs in doing business as a result of necessary precautions inherent in the bank’s operations.

“All of these and more are seen to put pressure on the bank’s earnings,” BDO said.

In all, the profit of BDO fell by 48.3 percent to P16.6 billion from January to September compared to P32.11 billion in the same period last year due to the upfront provisions booked in the second quarter in anticipation of potential delinquencies due to the global health crisis.

During the nine-month period, BDO’s net interest income increased by 12.8 percent to P99.82 billion from P88.46 billion in the same period last year, while non-interest income fell 16.7 percent to P36.77 billion from P44.12 billion.

Fee-based income plunged by nearly 24 percent to P17.4 billion from P22.83 billion, while foreign exchange gains plummeted by 61 percent to P971 million from P2.48 billion as some of the bank’s businesses, specifically those that rely on face-to-face interaction, are still gradually rebuilding their volumes.

BDO said wealth management remained resilient with trust volume and fees sustaining steady growth to P10.85 billion during the nine-month period despite soft market conditions.

Operating expenses declined by 2.5 percent to P83.64 billion from P85.83 billion on lower volume-related expenses.

BDO’s loan book expanded by six percent to P2.2 trillion, driven by corporate and consumer accounts as it remained supportive of its borrowing clients.