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BDO makes P5.8 B in Q1, up 6%


By Lee C. Chipongian


BDO Unibank, Inc., the banking unit of the Henry Sy-led SM Group, had net earnings of P5.8 billion in the first quarter, a record six percent higher year-on-year from recurring and other income sources.

BDO President and CEO Nestor V. Tan yesterday said the bank have a generally positive outlook for 2017 and are looking at a full-year net income target of P28 billion. In 2016, the country’s largest lender reported net profits of P26.1 billion.

Tan said their business outlook this year are mostly anchored on sustained expansion in loans and deposits, upside from infrastructure projects, steady rise in fee income and continued branch expansion in regional markets.

In the first quarter period, Tan said results were all “good news” for the bank as income was driven by a 21 percent growth in loans and 17 percent increase in CASA (current account, savings account) deposits. Fee income increased by 42 percent.

The balance sheet is still driven by customer loans while recurring income went up by 25 percent during the period.

Another good news, added Tan, is that their margins have started to move up even before any interest rate hikes could happen.

The bank’s net interest margin went up to 3.28 percent in the first quarter from 3.24 percent in the previous period.

Tan is confident the bank’s positive outlook will continue this year, pointing out the “positives” such as resilient consumer markets, President Duterte’s focus on infrastructure spending, the expected increase in foreign direct investments and first US growth.

“We’re trying to achieve a good balance of profit growth, diversification and sustainability and (that’s) good growth that’s sustainable overtime,” said Tan.

The BDO chief said they continue to perform better in terms of growth buoyed by stronger growth in the market and their performance is reflected in their return on equity (ROE).

“Our outlook is that rates will move up and we are expecting upward trends. We already shrank our portfolio and shorten the duration of our investments so we don’t want to be caught in a rising rate environment,” noted Tan.

Last year, the bank reported 10 percent ROE in the first quarter and the P28-billion income guidance for 2017 is expected to yield 11 percent ROE.

The uncertainties or sources of risks, in the meantime, for 2017 are from the higher interest rates regime and “potential (further) depreciation of the peso.”

“(Also) the uncertain impact of tax reforms, regional geo-political uncertainties and uncertainty over impact of Trump’s policies,” he said.

For the first quarter of 2017, BDO reported a net interest income of P18.4 billion, up 19 percent year-on-year. Customer loans were up 21 percent to P1.5 trillion, with “all market segments turning in robust expansion rates.” The bank’s deposits grew by 13 percent to P1.9 trillion mainly because of the 17 percent growth in low-cost CASA deposits.

“Other income likewise contributed significantly to the bottom line, led by fee-based service income from payments and settlements, credit card acquiring fees and wealth management services, which increased by 42 percent to P6.8 billion and insurance premiums further adding P2.2 billion,” the bank said.

Trading and foreign exchange gains dropped by four percent to P1.4 billion.

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