BDO UNIBANK, Inc. posted a higher net profit in the second quarter on better net interest earnings and service charges, fees and commissions, as well as foreign exchange gains.

The bank booked an attributable net income of P12.205 billion in the second quarter, up 10.64% from the P11.031 billion in the same period in 2021, according to its quarterly report disclosed to the stock exchange on Monday.

This brought its attributable net profit for the first half to P23.943 billion, 12% higher than the P21.421 billion seen in the comparable year-ago period, amid “strong” results across the lender’s core businesses.

The bank said in a statement that its pre-provision operating profit was at P39.2 billion, 18% higher year on year, showing the strength of its core income sources amid a tempered increase in operating expenses.

BDO’s first semester performance translated to a return on average common equity of 11.26%, up from 10.75% the year prior, and a return on average assets of 1.3%, also better than the 1.26% seen in the first half of 2021.

“BDO’s established business franchise, healthy capital position, and sustainable earnings performance reinforce the bank’s resilience against prevailing macro headwinds and put it in a good position to capitalize on the country’s structural opportunities for long-term sustainable growth,” the lender said.

The bank’s net interest income in the second quarter stood at P35.537 billion, rising by 9.6% from the P32.423 billion posted a year prior.

This was driven by the 5.64% growth in its interest earnings from loans and receivables to P32.705 billion, as well as the 31.94% increase in its income from trading and investment securities to P5.883 billion.

These helped offset the slight rise in its interest expenses to P3.514 billion from P3.47 billion.

For the first semester, BDO’s net interest income was at P69.449 billion, 8% higher than the P64.444 billion seen in the same period last year, amid an expansion in earning assets and improved funding costs.

Meanwhile, the bank’s non-interest income was at P17.596 billion in the second quarter, up by 22.95% year on year from P14.311 billion.

The increase came on the back of a 34.1% rise in its income from service charges, fees and commissions to P9.294 billion, as well as the 215.35% growth in its foreign exchange gains to P2.321 billion from P736 million, offsetting the P1.172-billion net trading loss seen in the quarter versus the P511-million net gain posted the year prior.

BDO’s non-interest earnings for the first half grew 15% to P34.276 billion from P29.681 billion on the back of an expansion in fees and insurance premiums.

On the other hand, the lender’s total operating expenses for the second quarter went up by 9.41% to P32.692 billion from P29.88 billion. For the first half, expenses climbed by 6% to P64.54 billion from P60.949 billion.

The bank’s net loans and receivables stood at P2.52 trillion as of June, up by 2.86% from the P2.45 trillion seen at end-2021, with customer loans growing by 9% year on year.

Its nonperforming loan (NPL) ratio declined to 2.39% at end-June from 3.12% a year prior.

Despite improved asset quality, BDO set aside P8.2 billion in provisions for impairment losses in the first half, up by 21% year on year. This brought its NPL coverage ratio to 138%.

Deposit liabilities grew by 5% to P2.96 trillion as of June from P2.82 trillion at end-2021 on the back of the expansion of demand (10%), savings (4%) and time (4%) deposits. BDO said current account, savings account deposits now comprise 85% of the total.

The bank’s capital adequacy ratio was at 14.48% as of June, inching down from 14.99% a year prior. Still, this remained well above the regulatory minimum of 10%.

Total resources rose by 10% year on year to P3.8 trillion as of June amid higher consumer loans and investment securities, mainly funded by deposits.

BDO’s shares went down by P5.70 or 4.77% to close at P113.80 apiece on Monday. — BVR