BDO sees 36% slump in 2020 income

BDO Unibank Inc.’s earnings slumped by 36.2 percent to P28.2 billion in 2020 from a record high of P44.2 billion in 2019 as provision for potential loan losses hit an all-time high of P30.2 billion due to uncertainties brought about by the pandemic.

The record amount set aside by BDO last year was almost five times the P6.2 billion allocated in 2019 when the bank maintained conservative credit and provisioning policies.

“The bank’s provisions of P30.2 billion were in line with prudent credit and provisioning policies meant to further strengthen its balance sheet,” BDO said.

Its non-performing loan (NPL) ratio rose to 2.65 percent last year from 1.2 percent in 2019.

Despite the higher provisioning, the bank’s NPL coverage declined to 109.5 percent last year from 164.7 percent in 2019. BDO’s total loan loss reserves were equivalent to three percent of gross customer loans, more than sufficient to cover for potential losses.

The bank’s loan book inched up by three percent to P2.3 trillion, driven by consumer and corporate accounts, while checking and savings account deposit base went up by 17 percent to P2.1 trillion as clients were still able to access BDO products and services through its branches, ATMs and digital channels even during the height of the lockdown.

As a result, BDO’s net interest income booked a doubledigit 12 percent growth to P133.7 billion in 2020 from P98.3 billion in 2019 as it assisted borrowers affected by the COVID-19 pandemic to ensure uninterrupted access to credit facilities.

Likewise, the bank extended payment holidays to clients as mandated under Republic Act 11469 or the Bayanihan to Act as One Act (Bayanihan 1) and RA 11494 or the Bayanihan to Recover as One Act (Bayanihan 2).

On the other hand, the bank’s non-interest income declined by eight percent to P55.2 billion in 2020 from P60.6 billion in 2019, supported by feebased income, trading gains and insurance premiums.

“Business volumes were initially impacted by mobility restrictions, but have since begun to recover gradually. Wealth management, on the other hand, remained resilient with trust volumes and fees sustaining growth,” BDO said.

The bank pointed out trading gains increased as it capitalized on favorable market conditions, while insurance premiums grew modestly despite the initial impact of the lockdowns.

Operating expenses slipped by two percent to P112.6 billion from P115.2 billion due to a reduction in marketing and volume-related expenses.

“The bank relied on its strong and resilient business franchise and balance sheet to support core business operations, despite significant hurdles from the pandemic and ensuing economic lockdown,” BDO said.

Despite the pre-emptive provisions and the business impact of COVID-19, BDO’s capital base expanded by six percent to P393 billion. This translated to a capital adequacy ratio and common equity tier 1 ratio at 14.4 percent and 13.2 percent, respectively, comfortably above minimum regulatory levels.

The bank’s book value per share likewise increased by six percent to P88.11 from P83.03.