BDO Unibank, Inc. posted a higher net income in the third quarter as its core businesses continued to grow despite the coronavirus pandemic.
The Sy-led bank booked a net profit of P12.3 billion from July to September, up by 3% from P11.967 billion in the same period last year, it said in a disclosure to the local bourse on Monday.
This brought its earnings for the first nine months to P16.6 billion, down 48% from P32.1 billion in the comparable year-ago period as it set aside more loan loss provisions “in anticipation of potential delinquencies due to the pandemic.”
“Despite BDO’s promising results, the bank recognizes that the pandemic difficulties still lie ahead. The delinquency problem on loans have not yet peaked, interest rate caps on credit cards will be instituted soon and there are added costs in doing business as a result of necessary precautions inherent in the bank’s operations. All of these and more are seen to put pressure on the bank’s earnings,” the lender said.
“BOO believes that its strong business franchise and robust balance sheet place the bank in a good position to leverage on a post-pandemic economic recovery,” BDO added.
Return on average equity was at 5.97% as of September while return on average assets stood at 0.68%, down from 12.53% and 1.4% in the same period last year, respectively.
BDO’s quarterly report showed its net interest income grew 6% to P33.43 billion in the third quarter from P31.535 billion in the same period last year.
This came on the back of a 45.45% decrease in interest expense to P5.064 billion in the quarter, which offset a 6.27% drop in loans and other receivables to P33.972 billion and a 7.63% decline in gains from trading and investment securities.
In the first nine months, its net interest income climbed by 13% year-on-year to P99.825 billion.
The bank said loans rose six percent to P2.2 trillion as of September on the back of its corporate and consumer accounts.
“The bank remained supportive of its borrowing clients, ensuring continued access to their credit facilities to help them manage their funding requirements during these challenging times, notwithstanding loan payment deferments under Bayanihan I and II,” BDO said.
Even as its lending book grew, the bank’s gross non-performing loans (NPL) ratio stood at 1.97%, while its NPL coverage was at 138%. Total loan loss provisions in the first nine months stood at P23.8 billion.
Meanwhile, deposits with the bank went up 3% to P2.57 trillion at end-September on the back of the growth in its current account, savings account (CASA) deposits. The bank said its CASA ratio climbed to a new high of 79%.
On the other hand, non-interest income totalled P11.987 billion in the third quarter alone, sinking by 17.98% from comparable year-ago period, due to lower income from service charges, fees and commissions, foreign exchange gains, insurance premiums and other sources.
This brought its non-interest income for the first nine months to P36.772 billion, down from P44.123 billion last year.
“Wealth management remained resilient with trust volume and fees sustaining steady growth despite soft market conditions. However, some of the bank’s businesses, specifically those that rely on face-to-face interaction, are still gradually rebuilding their volumes,” BDO said.
BDO’s resources went up 7% to P3.3 trillion at end-September on the back of the growth of its liquid assets and loans and funded by deposits, bond issuances and capital.
Its capital base stood P378.6 billion. The bank’s capital adequacy ratio was at 14.3% while its common equity Tier 1 ratio stood at 13.2%, both above the regulatory minimum.
BDO shares closed at P95.25 apiece on Monday, down by P1.75 or 1.8% from its previous finish of P97 per share. — KKTJ