BDO Leasing sees flat earnings
BDO LEASING and Finance, Inc. (BDO Leasing) is looking to maintain its bottom line at P570 million this year on the back of its car financing venture and with the firm riding on the government’s infrastructure spending thrust that is seen to boost its portfolio.
“The portfolio growth will at least be 20%... now in terms of income, we will see if we can maintain the P570 [million] because we’re carrying the joint venture in our backs, so until they become profitable, we will have to absorb the 40% of whatever they earn or lose,” BDO Leasing Vice-Chairman and President Roberto E. Lapid told BusinessWorld on the sidelines of its annual stockholders’ meeting last April 7 when asked about the firm’s outlook for 2017.
The listed subsidiary of Sylead BDO Unibank, Inc. ( BDO) saw its net income reach P570 million in 2016, higher from the P556 million recorded in 2015, on the back of an expansion in its interest income from its leasing and lending activities.
Its total portfolio registered a compounded annual growth rate of 16% after it nearly doubled to P31.4 billion last year from the P17.2 billion booked in 2012.
BDO Leasing formed a partnership with Mitsubishi Motors Philippines Corp. (MMPC), Sojitz Corp. and JACCS Co. Ltd. last January 2016. The listed company owns 40% of the joint venture company, while the foreign firms, including MMPC, control 60% of the collaboration. The partnership was made for BDO Leasing to provide its financing services to individual and corporate buyers of MMPC.
“Last year, meron kaming inabsorb na ( We already absorbed some last year), this year, maybe a little more, but eventually [the partnership] will contribute to the profitability of BDO Leasing as an equity investment,” Mr. Lapid said.
Meanwhile, Mr. Lapid said BDO Leasing expects the country’s construction, transportation, logistics and service trading sectors to boost its portfolio this year.
He also noted that the government’s focus on aggressively spending on infrastructure, particularly those approved under the public- private partnership (PPP) scheme, will also drive the firm’s core business.
“Considering that the administration of President [ Rodrigo R.] Duterte... has already approved at least seven PPP projects and therefore, this will really move our business by way of capex (capital expenditure) on equipment and other services,” Mr. Lapid said during the stockholders’ meeting.
The government plans to spend as much as P847.2 billion on public infrastructure this year, which is equivalent to 5.3% of gross domestic product.
The Duterte administration has focused on hiking the share of infrastructure spending to 7% of the Philippine economy by 2022 to address the country’s rising needs while also spurring further growth.
“Construction, transportation, which is a major part of our portfolio, and the service-related industries like engineering and related to construction will be very instrumental in doing our portfolio because most of the equipment especially the brand new ones will be financed considering that these are in the millions of pesos,” Mr. Lapid told BusinessWorld separately.
“A lot of our contractor clients are now buying brand new and auctioned units. They’re no longer using the reconditioned — seldom do they use, but for the construction projects, the big ones, they use the brand new ones,” he added.
BDO Leasing is the leasing and financing arm of BDO, which provides customers direct leases, real estate leases, sale and leaseback arrangements as well as receivables factoring. The firm is looking at a conservative annual growth rate guidance of 10% for their total portfolio in the coming years.
“The minimum guidance is 10% every year, for the next maybe five years... the [compounded annual growth rate] has been 16% in the past five years, but conservatively it’s 10% every year,” Mr. Lapid said.
Meanwhile, BDO Leasing’s total assets also expanded by 30% to P38.9 billion at end 2016 compared to the P34.5 billion booked the previous year, buoyed by its net lease and loan portfolio that likewise grew 14% to P31.4 billion last year from the P27.5 billion recorded in 2015.
Shares in BDO Leasing gained 19 centavos or 4.70% to end at P4.23 apiece on Monday.