BDO net income up by 19% in Q1

BDO Unibank Inc. saw its first quarter net income going up by 19 percent on the back of the robust performance from service fee businesses that compensated for the weak demand for loans.

During the bank’s annual stockholders’ meeting on Friday, BDO Unibank President Nestor Tan said the bank’s net income during the period amounted to P10.4 billion, up from the P8.8 billion recorded in the same period last year.

Loans dipped by 1 percent to P2.2 trillion, while total deposits went up by 2 percent to P2.6 trillion, underpinned by the 11 per cent rise in current account and savings account (CASA) deposits, with the CASA ratio hitting a record 83 percent.

Non-interest income recovered driven by the strong performance of wealth management and life insurance businesses, as well as the normalization of trading and forex gains.

Operating expenses, meanwhile, were relatively flat compared to last year.

Tan said the bank set aside an additional P2.9 billion in provisions even as the first quarter nonperforming loan (NPL) ratio of 2.81 percent remained within expectations, and is still below the 3-percent NPL ratio projected for end-2020.

NPL coverage is now at 107.1 percent, more than adequate to cover for potential losses.

The bank’s capital base strengthened to P400.9 billion with capital adequacy ratio and Common Equity Tier 1 (CET1) at 14.7 percent and 13.6 percent, respectively.

Tan said that for this year, the continued limitations in economic activity as well as inflation pressures are seen to delay economic reforms.

“Loan growth is expected to be slow given the difficult operating environment. NIM (net interest margin) is expected to persist under the prevailing low-interest rate environment,” he said.

“Meanwhile, wealth management, life insurance, and other fee-based businesses initially affected by mobility restrictions seem to recover. We expect loan delinquencies to peak in the second quarter of 2021 but this will remain manageable,” said Tan.

Tan said that in the long term, the bank will focus on untapped markets.

“The Philippines is still underbanked and 60 to 70 percent of Filipinos still do not have bank accounts. And I think a third of municipalities in the country are still not covered by a formal banking presence. So, for the next five years, I guess our focus will be on tapping these untapped markets,” he said.

BDO Unibank’s shares went up by 1.9 percent to close at P105 apiece on Friday.