BPI optimistic on keeping NPLs low

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) said provision for bad debts would remain elevated this year as the bank’s non-performing loan (NPL) ratio may rise further due to the impact of the pandemic.

In a virtual roundtable discussion with The STAR, BPI president and chief executive officer Jose Teodoro “TG” Limcaoco said the bank’s provision for potential loan losses would remain above P5 billion this year, higher than the pre-pandemic levels.

“I think provisioning will remain higher than normal, we provisioned about P3.6 billion in the first quarter. Pre-pandemic, we were provisioning only about P5 billion every year. So I think it will be higher than P5 billion this year, but won’t be P28 billion which is what we provisioned in 2020,” Limcaoco said.

Despite the 12.7 percent decline in provision for soured loans to P3.6 billion in the first quarter from P4.1 billion in the same quarter last year, the net income of BPI slumped by 21.7 percent to P5 billion from P6.39 billion.

The slump was traced to the one-time tax adjustment mandated under Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprise (CREATE) Act.

Due to uncertainties brought about by the global health crisis, BPI’s NPL ratio climbed to 2.76 percent in the first quarter from 1.82 percent in the same quarter last year.

The provisioning made last year amounting to P28 billion was five times the 2019 level to make sure NPLs are also covered this year.

Limcaoco said BPI’s NPL ratio has not yet peaked as the National Capital Region and nearby provinces were placed under enhanced community quarantine by the end of March until mid-May due to the resurgence of COVID-19 cases.

“NPLs tend to lag. Because of the second lockdown, we had a slow second quarter. I don’t think confidence has returned yet with the people in terms of mobility,” Limcaoco said.

He said BPI’s NPL ratio is likely to peak at below four percent this year.

Although the pace of vaccinations has picked up, Limcaoco’s concerns have shifted to the new Delta variant. “I’m really hoping that the economy opens up early 2022,” he said.