BPI Q1 net income drops, keen to buy Citibank biz

THE Bank of the Philippines Islands (BPI) reported last Thursday a 21.7-percent decline in its net income in the first quarter of 2021, due mainly to a one-off tax adjustment as provided by the new tax law.

The statement was followed by an announcement of BPI’S top official that the bank is keen on buying the Philippine business of Citibank N.A.

BPI said their net income hit P5 billion in the first three months of the year.

Their net income before taxes for the quarter was supposed to be a 5.1-percent improvement from their performance in 2020. However, a one-time tax adjustment in connection with previously booked loan provisions because of the Corporate Recovery and Tax Incentives for Enterprises (Create) law pushed this downward 21.7 percent from 2020.

The bank’s revenue largely showed growth in the fee income sector; but posted declines in interest-based income.

Net interest income dropped by 6.5 percent to P16.9 billion, driven by a 31-basis point contraction in net interest margin to 3.31 percent, BPI said.

Meanwhile, BPI’S non-interest income increased by 12.1 percent to P7.4 billion on the back of robust fee income, up by 27.8 percent to P5.7 billion.

BPI attributed the boost in non-interest income to higher fees from their bancassurance, asset management, transaction banking, and investment banking businesses.

The bank’s cost-to-income ratio during the period stood at 48.6 percent, improving from the 49 percent recorded in the prior year. This is as both total revenue and total operating expenses declined during the period.

In particular, total revenues for the first three months of the year declined by 1.5 percent to P24.3 billion while total operating expenses for the first quarter declined by 2.3 percent to P11.8 billion.

The bank reported a 2.76 percent non-performing loan ratio during the period, with NPL coverage ratio at 123.5 percent.

Soft demand also pulled BPI’S loan portfolio down 5 percent during the period to hit P1.4 trillion.

Both BPI’S total deposits and total assets were flat year-on-year. Total deposits stood at P1.7 trillion while its total assets stood at P2.2 trillion.

Keen to buy

IN a news briefing last Thursday, newly-minted BPI President and CEO Jose Teodoro K. Limcaoco said it is looking to acquire Citibank Philippines’ retail business after the foreign bank recently announced that it is pulling out their retail operations in the country.

Citibank’s portfolio “complements” BPI’S brand of retail banking.

“We have always been admirers of Citibank retail business. It is an excellent franchise. We have always looked at it, but we never believed that Citibank would ever give up on the Philippines,” Limcaoco said.

“People have reached out to us to tell us to tell us wha t the plans are for the Philippines. I think it is quite public knowledge that they will exit and they will try to sell the business. We have told them that as soon as there is any information to send us the information and we will take a look at it. Most likely we will be interested,” he added.

Citibank earlier announced that they are exiting the local retail banking space, a move that was made across a dozen other jurisdictions.

Should the acquisition push through, BPI said Citibank’s network and client base will double the local bank’s current credit card business.

Asked about funding for the potential acquisition, Limcaoco said that with their current metrics, he believes BPI can fund the acquisition internally.

BPI Executive Vice President Marie Josephine M. Ocampo also said Citibank will be a good addition to their current brand of banking.

“We like the Citibank portfolio a lot. We like the quality of their portfolio, we like the talent and we like the technology,” Ocampo, and Mass Retail Head, said.