BDO books flat first-half net income

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By Melissa Luz T. Lopez, Senior Reporter

SY-LED BDO Unibank, Inc. reported a P13.1-billion net income as of end-June, slipping from a year ago amid lower non-interest gains and bigger operating costs.

In a disclosure on Friday, BDO said it booked P13.1 billion in earnings in the first six months of the year, 1.5% lower than the P13.3-billion net profit logged at end-June 2017.

The bank said procedural changes in the investment portfolio of subsidiaries BDO Life which took effect earlier this year, as well as the continued expansion of rural lender One Network Bank, Inc. fed into BDO’s bottom line.

Minus these changes, net income “would have increased by 13%,” the bank told the Philippine Stock Exchange.

Net interest income surged by 19% year-on-year to hit roughly P46 billion as customer loans grew by a fifth to reach P1.9 trillion. The bank also reported a lower share of soured debts at 1.2% of the total despite “broad-based” loan growth across all market segments.

Bank deposits also posted a 17% climb to P2.3 trillion.

Total capital reached P303 billion as of June which brought BDO’s capital adequacy ratio at 14%, well above the 10% requirement set by the Bangko Sentral ng Pilipinas.

Meanwhile, non-interest income declined by two percent to P22.8 billion. BDO said increases in insurance premiums and fee collections were offset by “unrealized mark-to-market losses” on BDO Life’s portfolio.

“Service charges and fees remained strong, but was tempered by weak underwriting and syndication activities in the capital markets,” the country’s biggest lender said.

The bank also incurred a 12% pickup in operating costs after it opened 45 additional branches and spent more on settling taxes. The Tax Reform for Acceleration and Inclusion law which took effect Jan. 1 doubled the documentary stamp tax rates imposed on bank checks, certificates of deposit, and similar financial instruments.

BDO currently runs 1,200 branches and over 4,000 automated teller machines nationwide, plus 24 service offices abroad.

The first semester income is barely half the P31 billion full-year profit guidance set by the bank when the year opened. BDO reported a P5.9-billion profit during the first three months of 2018.

“Despite the challenging macro environment, BDO will continue to capitalize on its strong business franchise and extensive distribution network, generate quality earnings driven by recurring income sources, as well as execute its growth strategy to expand into high growth areas and underserved segments,” the bank said.

BDO reported record earnings worth P28.1 billion in 2017.

Shares in BDO closed at P137 apiece on Friday, down 50 centavos or 0.36%.