BDO income up on expansion of core businesses

BDO Unibank, Inc. booked higher earnings in 2017 on the back of strong expansion across its business segments.

In a disclosure to the local bourse on Monday, the Sy-led BDO said it recorded a recordhigh net income of P28.1 billion in 2017, up 7% from the P26.1 billion logged in 2016.

BDO said the “sustained expansion in lending, deposit-taking and fee-based businesses” boosted its performance last year. The bank’s net interest income climbed 25% to P81.8 billion last year from the P65.6 billion posted in 2016.

The bank’s customer loans expanded 18% to P1.8 trillion from the P1.5 trillion booked in 2016 as all segments posted strong growth.

BDO’s total deposits likewise grew 11% to P2.1 trillion in 2017 from the P1.5 trillion booked in the prior year as low-cost current account and savings account deposits — which made up 73% of the bank’s total deposits — rose 12%.

The bank’s non-interest income also grew 13% year-on-year to P47.2 billion.

The increase, the bank said, was led by its fee-based income which rose 30% to P28.9 billion. Insurance premiums likewise went up 23% to P9.9 billion. These offset the 20% decline in the lender’s trading and foreign exchange gains to P3.9 billion due to “challenging market conditions.”

Overall, the bank’s gross operating income rose 20% to P129 billion.

Meanwhile, BDO’s operating expenses climbed 21% to P84.9 billion from the P70.1 billion logged in 2016. Excluding onetime and extraordinary items, however, expenses would have increased by just 15%.

The bank opened 76 new branches in 2017, bringing its total branches to 1,180, including its Hong Kong branch.

The lender also set aside higher provisions totalling P6.5 billion, which covers the required provisioning associated with the change in loan loss methodology to expected credit losses.

The bank’s gross non-performing loan (NPL) ratio improved to 1.2% in 2017 from its end- 2016 ratio of 1.3%. NPL cover also rose to 146% from the 139% in 2016.

BDO’s capital base stood at P298.3 billion, with its capital adequacy ratio and common equity Tier 1 ratio at 14.5% and 12.9%, respectively, above the regulatory requirements. The bank raised P60 billion in fresh equity through its stock rights offering in January 2017.

“For 2018, BDO believes that its focused growth strategy, robust business franchise and solid balance sheet and capital base place the bank well- positioned to tap opportunities in growth sectors benefiting from the country’s favorable demographics and the government’s infrastructure build- up,” the bank said in the disclosure.

As of September 2017, BDO was the biggest bank in the country in terms of assets, capital, deposits and loans.

BDO shares closed at P150 each yesterday, up P3 or 2.04% from the previous day.