BPI posts higher 9-month earnings as loan loss buffers ease

MANILA, Philippines — The Bank of the Philippine Islands saw its profits grow in the first nine months, as the lender reduced its buffer funds against unpaid loans from pandemic-battered borrowers.

In a disclosure to the stock exchange on Thursday, the 170-year-old bank of the Ayala Group reported its net income grew 1.8% year-on-year to P17.5 billion during the January-September period. However, the figure was still below the company’s nine-month earnings of P22 billion in 2019, or before the pandemic struck.

Financial results showed the earnings growth was a result of cash that the bank already had on hand. During the period, BPI set aside P10.3 billion to shield its balance sheet from loan defaults as the pandemic drags on, down 50% year-on-year.

BPI trimmed the rainy-day funds as the wave of unpaid loans eased. The lender’s non-performing loans (NPL), or debts that remain unpaid 30 days past the due date, accounted for 2.73% of its entire loan portfolio by the end of third quarter, smaller compared to 2.98% share in the preceding quarter. At the same time, BPI’s NPL coverage ratio stood at 130.72%, well-above industry levels.

The lower provisions, in turn, offset the bank’s weak revenues, which dropped 6% on-year to P71.6 billion in the first nine months. Total operating expenses, meanwhile, went up 3.5% year-on-year to P36.5 billion “driven by higher technology cost as the bank continues to invest in digitalization.”

Broken down, net interest income fell at an annualized rate of 5.6% to P51.2 billion as the Bangko Sentral ng Pilipinas’ ultra-loose monetary policy pushes down interest rates across banks’ loan portfolios and treasury assets. But the cheaper borrowing costs boosted demand for loans, which grew 0.9% year-on-year to P1.4 trillion amid higher mortgage, credit card and microfinance loans.

Non-interest income, on the other hand, sagged 7.0% on-year to P20.5 billion, with a 27.2% annual increase in fee income cushioning a decline in trading income.

Total deposits, considered a lifeline for banks, was up 6.6% year-on-year to P1.8 trillion.

As of 11:28 a.m., shares in BPI were trading down 0.58%, bucking gains in the main index.