BDO net income climbs in Q1 on strong lending

SY-LED BDO Unibank, Inc. (BDO) saw its net income reach P5.8 billion in the first quarter of the year, mainly driven by an increase in its net interest income on the back of a double-digit expansion in its loans during the period.

The country’s largest bank said it recorded a 6% growth to P5.8 billion in its bottom line in the first three months of 2017 compared to the P5.5 billion booked in the same period in 2016.

Its net interest income grew 19% to P18.4 billion in the quarter from P15.5 billion in the same period in 2016.

The bank’s customer loans likewise rose to P1.5 trillion or 21% higher year on year, while total deposits expanded by 13% to P1.9 trillion from the P1.7 trillion recorded in the same period last year after its low- cost current account and savings account deposits grew 17%.

“We expect sustained expansion in loans and deposits,” BDO President and Chief Executive Officer Nestor V. Tan told reporters in a media briefing on Thursday, referring to the bank’s outlook for 2017.

BDO’s provisions amounted to P1.4 billion during the quarter even as its asset quality remained “healthy” with its nonperforming loans (NPL) ratio staying at 1.3% and NPL cover at 138%.

Meanwhile, its fee-based service income from payments and settlements, credit card acquiring fees and wealth management services also expanded to P6.8 billion, up 42% year on year.

“We see a steady rise in fee income [ this year] as our businesses start to

consolidate in areas outside the National Capital Region,” Mr. Tan said.

The Sy-led bank’s P60-billion stock rights offer brought its capital base to P282 billion that boosted its capital adequacy ratio to 15.6% in the first quarter and its common equity Tier 1 ratio to 14%.

“We will continue to expand our branch network because we believe that the economy outside of the NCR will drive our growth in the future,” Mr. Tan said.

“And we will continue to diversify as we said we’re expanding in microfinance to One Network Bank (ONB), to the underserved and we’re expanding our life insurance business,” he added. In August 2014, the listed lender bought 96% of the biggest Mindanao-based rural lender ONB.

For this year, Mr. Tan said the bank has trimmed their earnings guidance to P28 billion from the P28.8 billion previously “because of the accelerated investments in our initiatives.”

Meanwhile, asked if they would want to become a qualified Association of Southeast Asian Nation (ASEAN) bank (QAB) for the ASEAN Banking Integration Framework (ABIF), Mr. Tan said, “Definitely, because we would like to have a bank that meet ASEAN standards.”

The ABIF was first endorsed in December 2014 and sought to allow duly-identified QABs to “operate freely” across membereconomies in the region.

To be named as a QAB, lenders must secure the endorsement of regulators in its home country and be accepted by offshore authorities where it wants to set up operations.

Shares in BDO lost P1.10 or 0.92% to end at P118.80 apiece on Thursday.