BDO sees up to 10% growth in 2022 earnings

MANILA, Philippines — Sy-led BDO Unibank Inc. expects a five to 10 percent growth in earnings this year as the country’s largest bank remains cautiously optimistic amid the ongoing   pandemic as well as Russia’s invasion of Ukraine.

BDO president and CEO Nestor Tan said during the bank’s virtual annual stockholders’ meeting that there are still uncertainties and headwinds this year.

“We expect improvements in operations to continue and we anticipate a five to 10 percent improvement in profits,” he said.

Tan said credit growth is seen at the eight to 12 percent range as asset quality seems to be under control and delinquencies are normalized.

“We are not sure whether we have finally shaken off COVID. The elections will clearly bring different expectations and different policies. Businesses have taken a pause before investing. Then on the geopolitical front, the Russia-Ukraine conflict has taken a toll on energy prices, the global supply chain and inflation expectations,” Tan said.

He said the momentum in 2021 was carried over to 2022 as the bank booked a 13 percent rise in net income to P11.7 billion in the first quarter from P10.4 billion in the same quarter last year,  driven by the listed bank’s core businesses.

The country’s largest lender said in a disclosure to the Philippine Dealing and Exchange Corp. (PDEx) that its net interest income rose by six percent to P33.9 billion from January to March   compared to P32.02 billion in the same period last year.

BDO’s loan book expanded by seven percent to P2.4 trillion on strong demand from corporate borrowers, the recovery in the middle market, and the resilience of the consumer segment.

Its deposit base booked a stronger 11 percent increase to P2.8 trillion with current account/savings account (CASA) deposits, now comprising 86 percent of total deposits.

The bank’s non-interest income  went up by nine percent to P16.7 billion from P15.37 billion, driven by fees and insurance premiums.

It said trading and foreign exchange gains were in line with normalized business levels.

The bank’s operating expenses rose by three percent to P31.8 billion in the first quarter   from P31.07 billion in the same period last year despite the 27.6 percent increase in provisioning for credit losses to P3.7 billion from P2.93 billion.

BDO said asset quality improved as non-performing loan (NPL) ratio declined to 2.72 percent from 2.81 percent with the continued reopening of the economy from strict COVID  lockdowns, resulting in greater mobility.

The bank’s NPL coverage rose to 120.8 percent.

BDO’s total capital base strengthened to P429.9 billion, with the capital adequacy ratio (CAR) and common equity tier 1 (CET1) ratio both increasing to 14.6 percent and 13.5 percent, respectively.

In end-March, the bank’s return on common equity (ROCE) increased to 11.09 percent from 10.56 percent, while its book value per common share rose by seven percent to P96.47 as of end-March.

“BDO’s sustained earnings performance, robust business franchise, and solid capital base place the bank in a good position for long-term sustainable growth,” it  said.

BDO has the country’s largest distribution network, with over 1,500 consolidated operating branches and more than 4,400 ATMs nationwide. It also has 16 international offices (including full-service branches in Hong Kong and Singapore) in Asia, Europe, North America and the Middle East.