BPI hedges vs expected losses, cutting Q1 gains

Ayala-led Bank of the Philippine Islands (BPI) has widened its room to squirm from market constriction borne from the 45-day enhanced community quarantine (ECQ) as it saw first quarter earnings suffer.

The listed bank said it hiked provisions for losses by more than twice (2.4 times) than the P1.80 billion it set aside in 2019 for the January to March period. BPI said it did so due to anticipated increase in nonperforming loans (NPL) amid the pandemic.

“This [increase in provision] is in expectation of npls in the future. it is not something that we see today ... [but] there is no question that there will be losses,” BPI President cezar P. consing said on Thursday.

The BPI posted net income of P6.39 billion in the first quarter, which was 5-percent lower than the P6.72 billion it reported in the same period last year.

The lower margin comes despite Bpi’s revenues in the first three months climbing 10.9 percent to P25.26 billion; net interest income also surged 13 percent to P18.14 billion. net interest margin stood at 3.63 percent—higher by 24 basis points from 3.39 percent year-onyear—as of end-march.

BPI said its loan portfolio also grew by 7.3 percent to P1.45 trillion in the first quarter, driven by microfinance, small and medium enterprise (SME), consumer and corporate loan segments. Total deposits, meanwhile, jumped by 4.3 percent to P1.68 trillion.

During Bpi’s stockholders’ meeting, consing said the bank has also focused on rendering loans to Smes, especially at a time that firms face problems with cash flows amid the pandemic-induced lockdown.

“We are focused on being a more financially inclusive bank. This is evident in the setting up of our microfinance and SME lending businesses,” he said.

consing said that 3-year old business segment it calls “BPI Banko” is now the second largest microfinance bank, with 15-percent market share, a network of 300 branches and over 100,000 clients. BPI Banko’s loan portfolio currently stands at P4.3 billion, according to the executive.

With limited mobility, consing said most of its clients are turning to digital platforms for banking services, noting that 92 percent of the transactions last week were done virtually. around 40 percent of clients are now enrolled in Bpi’s digital channels and 25 percent of them are considered regular digital “transactors,” he said. consing added that digital service fees now total to P1 billion annually. currently, the BPI official said that the bank is operating under a skeletal workforce arrangement after activating its business continuity plan, keeping about a third of its branches open for services.

“BPI is preparing for the potential extension of the enhanced community quarantine in its present form and modified form. We can run this place definitely under these circumstances,” he added.

Last month, BPI raised P33.9 billion—surpassing the initial target size of P5 billion by over six-fold— from bond issuance. each bond carries interest rate of 4.05 percent per annum and has a tenor of 1.5 years.

BPI shares ended flat at P60 each amid 0.46-percent uptick for the benchmark index on Thursday.