BPI earnings sink by over a fifth in 2020
BPI attributed the slump to the hefty amount of buffers it set aside to protect its balance sheet from rising unpaid loans as a result of the coronavirus pandemic.

BPI earnings sink by over a fifth in 2020

Ian Nicolas Cigaral (Philstar.com) - January 28, 2021 - 5:52pm

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) closed 2020 with earnings down by over a fifth after funneling resources instead to beefing up defenses against a slew of bad loans from pandemic-hit borrowers.

In a statement on Thursday, the 169-year-old bank reported a net income of P21.4 billion last year, down 25.7% year-on-year. Earnings dropped a bigger annual rate of 37.4% to P4.2 billion in the fourth quarter, figures showed.

BPI attributed the slump to hefty amount of buffers set aside to protect the bank's balance sheet from rising unpaid loans by customers unable to settle on time. Last year, non-performing loans (NPL), or debts that remained unpaid at least 30 days past due, ate up 2.68% of BPI's total loan portfolio.

For all of 2020, the bank's loan loss provisions reached P28 billion, five times bigger than 2019, putting its NPL coverage ratio above industry levels at 115.2%.

Broken down, revenues went up 10.5% year-on-year to P101.9 billion in 2020, driven by double-digit increase in both net interest income and non-interest income that offset a 5-percent decline in fee income. Operating expenses, meanwhile, was "almost flat" compared to the preceding year to P48.1 billion. 

This, in turn, yielded a cost-to-income ratio of 47.2%, better than 52.4% recorded in the prior year, financial results showed.

Similar to its rivals, BPI handed out fewer loans last year over fears that borrowers might have a hard time repaying their debts amid the recession. BPI's total loans as of end-2020 amounted to P1.4 trillion, down 4.6% on-year "primarily as a result of a slowdown in corporate lending." Notably, mortgage and microfinance loans ended the year with moderate growth rates of 6.6% and 5.7%, respectively.

At the same time, BPI's total deposits, considered lifeline for banks, inched up by measly 1.2% on-year to P1.7 trillion as jobless people dipped into their savings to survive hard times.

Last week, BPI announced plans to merge with its thrift banking arm, BPI Family Savings, in a bid to save on reserve costs. Once completed, central bank data showed BPI would overtake the Metropolitan Bank & Trust Co. as the third largest bank in asset terms. 

On Thursday, shares in BPI closed flat at P83.15 each.

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