BDO net profit grows 19 percent in Q1

Loans dipped by 1 percent year-on-year to P2.2 trillion, while total deposits went up by 2 percent to P2.6 trillion.

BDO Unibank, Inc. (BDO) posted a higher net income for the first three months of the year, registering a double digit growth from a year ago.

BDO reported to the local bourse a net income of P10.4 billion versus the posted P8.8 billion in the first quarter of 2020 amid strong performance from its service fee businesses.

“Loans dipped by 1 percent year-on-year to P2.2 trillion, while total deposits went up by 2 percent to P2.6 trillion, underpinned by the 11 percent rise in CASA(current account savings account) deposits, with the CASA ratio hitting a record 83 percent,” the Bank said.

“Non-interest income recovered driven by the strong performance of wealth management and life insurance businesses, as well as the normalization of trading and forex gains.

Operating expenses were relatively flat compared to last year,” it added.

Loss provision raised

Provisions set aside by the lender received an P2.9 billion more during the quarter with its non-performing loans (NPL) ratio of 2.81 percent kept within expectations. NPL coverage stood at 107.1 percent, it said.

BDO President Nestor Tan said that the current NPL ratio was below their expectations but more than such, the bank must protect its balance sheet.

Operating expenses were relatively flat compared to last year.

“I think we’re trending quite better than what we anticipated. But the challenge is not in the NPL ratio. The challenge is how we are able to remedy the situation once a client gets into trouble and we need to be able to help,” Tan explained.

“Also, the second thing that we need to do is to protect the balance sheet and as you have seen in 2020, we did pre-emptive provisioning and our NPL cover is in excess of 100 percent,” he added.

BDO’s capital base strengthened to P400.9 billion with capital adequacy ratio and common equity tier 1 at 14.7 percent and 13.6 percent respectively, both of which were above regulatory requirements.

For the full year 2020, BDO’s net profits went down to P28.2 billion from the recorded P44.2 billion in 2019 owing to its pre-emptive provisions of P30.2 billion to shield the lender against potential delinquencies.