High rates to continue affecting BPI’s margins
BANK of the Philippine Islands (BPI) expects its margins to be affected by the lagged effect of the central bank’s cumulative benchmark interest rate hikes in the last two years, an official said.
“There are many things that are expected to affect our margins. The rate effects are one thing,” BPI Chief Finance Officer Eric Roberto M. Luchangco said at a briefing on Thursday.
The Bangko Sentral ng Pilipinas (BSP) raised borrowing costs by a cumulative 450 basis points from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.
Still, the impact of the central bank’s tightening on BPI’s margins could be offset by efforts to increase the share of consumer loans in its portfolio, Mr. Luchangco added.
“We’re also looking to increase the percentage of consumer loans in our loan book. Consumer loans are higher-yielding loans, so that will kind of lift up the interest earned by the bank,” he said.
Under BPI’s base case scenario, they expect the BSP to implement its first rate cut by July, he added.
BPI’s net interest margin stood at 4.09% in 2023, while its net interest income rose by 22.7% P104.4 billion.
BPI Chief Credit Officer Joseph Anthony M. Alonso told reporters at the same event that the lender targets to increase consumer loans to comprise 50% of its loan book from the current 25-30% share.
BPI’s net income rose by 44.3% to P13.1 billion in the fourth quarter of 2023, bringing its full-year net profit to P51.7 billion, up by 30.5%.
Its shares went down by P1 or 0.83% to end at P119 apiece on Thursday. — AMCS
