BDO posts flat net income in first semester
BDO UNIBANK, Inc. (BDO) saw a flat bottom line in the first half of the year, with earnings driven by an increase in its total loan book, expansion in low-cost deposits and higher fee-based revenues.
The country’s largest bank in asset terms said in a disclosure to the local bourse on Monday that its net profit stood at P13.3 billion in the first semester, nearly flat from the P13.2 billion recorded in the same period a year ago.
BDO attributed its first-half performance to an “expansion in loan portfolio, growth in low-cost deposits and higher recurring fee-based service income.”
Meanwhile, excluding one-offs, the listed lender’s core earnings booked a double-digit growth in the period.
“Excluding the extraordinary items from the consolidation of newly acquired subsidiary BDO Life last year, this represents a strong 16% growth in core earnings,” the Sy-led lender said.
BDO Life Assurance Co., Inc. (BDO Life) is the bank’s life insurance subsidiary, previously known as Generali Pilipinas Life Assurance Co. Inc. (GPLAC). The bank fully acquired Generali Pilipinas Holdings Company Inc. (GPHC), the parent firm of GPLAC and non-life insurer Generali Pilipinas Insurance Co., last July 2016.
The bank said its consumer loans grew 17% to P1.6 trillion in the first semester from the P1.4 trillion booked in the comparable period in 2016.
Meanwhile, total deposits reached P2 trillion at end-June, higher from the P1.8 trillion registered in the previous year, boosted a 17% growth in its low-cost current account, savings account deposits, which make up 73% of the bank’s deposit base.
BDO’s net interest income jumped 22% to P38.6 billion in the first half from the P31.7 billion recorded in the same period in 2016.
“Operating expenses increased by 20% on the bank’s aggressive drive to grow its core business along with investments in new markets,” BDO said. “ Excluding extraordinary items and the consolidation effects of ONB (One Network Bank) and BDO Life, operating expenses would have risen by only 14%.”
Meanwhile, the bank’s asset quality remained steady after its gross non-performing loans (NPL) ratio was flat at 1.3%. Its NPL cover was at 137% in the first half.
BDO’s capital base grew to P289 billion from the P211.1 billion recorded in the same period in 2016, driven by its P60-billion stock rights offer (SRO) in January and retained earnings from operations.
January’s SRO also brought the bank’s capital adequacy ratio and common equity Tier 1 ratio to 15.7% and 14%, respectively.
LTNCD OFFER
Meanwhile, the listed lender also started an offer of peso-denominated long-term negotiable certificates of deposits (LTNCD) yesterday, from which it is looking to raise P5 billion in a bid to “diversify the maturity of its funding sources and support business expansion plans.”
BDO said the LTNCDs will have a term of five and a half years, with indicative pricing at 3.50% to 3.75%. The final coupon rate will be set prior to or at the end of the offer period, with interest to be paid quarterly. The minimum investment is P100,000 with increments of P50,000.
The offer period began yesterday and will end on Aug. 11, with the issue date set on Aug. 18. However, the bank can adjust the timing of the offer as needed and also has the option to hike the issue size, depending on the market’s feedback.
LTNCDs, like regular time deposits, offer higher interest rates but unlike time deposits, cannot be pre-terminated.
Being “negotiable” means that these can be sold on the secondary market.
BDO has tapped Deutsche Bank AG, Manila Branch and ING Bank N.V., Manila Branch as the offer’s joint lead arrangers and selling agents. BDO and BDO Private Bank will also act as selling agents. — J.M.D. Soliman