BDO registers lower first half net income

BDO Unibank Inc. reported a lower net income during the first half of 2018, the lender said in a regulatory filing.

The bank made “P13.1 billion in net income in the first six months of 2018 on the back of solid results across its core lending and deposit-taking businesses, down from the year-earlier level of P13.3 billion,” according to the filing submitted by Ma. Cecilia S. Santos,  BDO’s first vice president and alternate corporate information officer.

Excluding the impact of the new Philippine Financial Reporting Standards 9 implemented early this and covering the investment portfolio of insurer BDO Life and the ongoing expansion of rural bank unit One Network Bank, net income would have increased by 13 percent, the bank said on Friday.

“Net interest income remained the major earnings driver, accelerating by 19 percent to almost P46.0 billion, driven by the hefty 20 percent jump in customer loans to P1.9 trillion on broad-based growth across all market segments,” BDO noted.

Total deposits expanded by 17 percent to P2.3 trillion, supported by a 14-percent increase in low-cost current account, savings account deposits, representing more than 70 percent of total deposits.

Low-cost CASA funding combined with upward loan re-pricing due to rising interest rates resulted in net interest margins improving to 3.50 percent from 3.43 percent.

Non-interest income totaled P22.8 billion, down 2 percent year-on-year. The 23 percent growth in insurance premiums to P5.6 billion and the 7 percent growth in fees and other income to P17.2 billion were offset by unrealized mark-to-market losses on BDO Life’s portfolio.

“Service charges and fees remained strong, but were tempered by weak underwriting and syndication activities in the capital market,” the bank said.

Gross operating income grew by 11 percent to P68.8 billion.

Operating expenses were higher by 12 percent as the bank continued to expand with 45 new BDO branches opened, as well as higher documentary stamp taxes.

“Excluding the impact of higher DST, operating expenses would have risen by only 10 percent,” the bank noted.

“The bank remained prudent as it boosted provisions to P3.5 billion even as gross non-performing loan ratio was lower year-on-year at 1.2 percent from 1.3 percent.

NPL cover increased to 158 percent from 137.2 percent.

Total capital grew to P303 billion, with capital adequacy ratio at 14 percent and common equity tier 1 ratio at 12.4 percent.

“Despite the challenging macro environment, BDO will continue to capitalize on its strong business franchise and extensive distribution network, generate quality earnings driven by recurring income sources, as well as execute its growth strategy to expand into high-growth areas and underserved segments,” the bank said. —VDS, GMA News