BPI profits still down in Q3 in higher loss provisions

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) sustained lower earnings in the third quarter as the lender continues to beef up defenses against potential loan defaults stemming from pandemic-induced joblessness and business closures.

In a statement on Thursday, the 169-year-old bank reported that net income amounted to P5.5 billion in the July-September period, down 33.7% year-on-year. In the first 9 months, profits fell 22.1% annually to P17.17 billion.

Financial performance were heavily deterrred by P21.06 billion in loan loss provisions set aside from January to September, an amount 4.6 times bigger than P4.58 billion reserved in the same period last year.

While boosting defenses, BPI's loan portfolio has so far remained healthy with only 2.98% of loans turning sour during the nine-month period.

Breaking down BPI's latest financial results, nine-month revenues jumped 9.7% on-year to P77.88 bilion even as total operating expenses inched down 1.6% annually to P36.48 billion. That yielded a cost-to-income ratio of 46.8%, lower than 52.2% recorded a year ago.

Total loans hit P1.38 trillion as of September, inching up 0.9% year-on-year, reflecting an overall hesitation among lenders to extend credit amid the health crisis for fears of not getting their money back. That said, loan segments such as mortgage and corporate posted faster loan growth for BPI at 8.7% and 2.6%, respectively.

Deposits, meanwhile, increased an annualized rate of 4% to P1.68 trillion, BPI said.

Meanwhile, year-to-date earnings from borrowing costs grew, with net interest income up 11.8% to P54.40 billion. Non-interest income reached P23.48 billion, higher by 5.1% versus 2019 levels "primarily from robust securities trading gains," BPI said.

Overall, BPI's total assets stood at P2.20 trillion as of September, 3.6% higher year-on-year.

Shares in BPI went up 9.86% to close at P75.80 each on Wednesday. — Ian Nicolas Cigaral