BPI books higher net profit in the third quarter

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BANK OF THE Philippine Islands (BPI) reported a higher net profit in the third quarter on the back of double-digit net interest income growth.

In a disclosure to the local bourse on Wednesday, the Ayala-led bank said its net income ended at P5.98 billion in the July-September period, 12% higher than the P5.36 billion logged a year ago.

This brought BPI’s net earnings for the first nine months to P17.01 billion, flat from last year.

The lender’s revenues grew by 7.3% to P56.89 billion in the nine months ended September, driven by the 15.1% year-on-year increase in its net interest income, which stood at P40.88 billion.

Meanwhile, BPI’s net interest income in the third quarter grew 21% from a year ago.

Interest income from loans grew 24.2% year-on-year, as the yield on its interest-earning assets improved by 37 basis points (bp).

However, this was partially offset by a 24-bp increase in funding costs due to higher time deposit rates and documentary stamp taxes on deposits following the implementation of the first tranche of the Tax Reform for Acceleration and Inclusion Act this year.

Total loans stood at P1.27 trillion, up 12.9% in a comparable year-ago period, on the back of strong growth in corporate and credit card lending at 13.7% and 22%, respectively.

Total deposits on the other hand was at P1.54 trillion, 2.5% higher from a year ago, with current and savings accounts (CASA) booking a 6.4% growth.

BPI’s CASA ratio was at 74%, while its loan-to-deposit ratio stood at 82.2%.

The bank’s net interest margin (NIM) stood at 3.24% in the third quarter, higher than the 3.1% in the second quarter and 2.91% in the first quarter, due to “favorable” loan repricing following the policy rate hikes implemented by the central bank since May.

“This trend is reflective of the bank’s proactive balance sheet and funding strategies in response to changes in the interest rate environment,” BPI added.

On the other hand, BPI’s non-interest income stood at P16.01 billion, declining 8.7% from the P17.54 billion logged in the same period last year, due to lower securities trading gains, trust and investment management fees, insurance income and asset sales. However, the bank registered higher fee-based income from its credit card, deposit and rental businesses.

Meanwhile, the bank set aside P2.84 billion in provisions for loan losses in the first nine months, 21.2% lower year-on-year.

BPI’s non-performing loan ratio increased slightly to 1.82% as of end-September from the 1.8% recorded last June, with a reserve cover ratio of 95.7%.

Operating expenses amounted to P32.08 billion year-to-date, up 15.2% from a year ago, due to the accelerated spending of the bank to support its digitalization strategy and the expansion of its small and medium business lending arm BPI Direct BanKo.

Return on equity was 10.4%, 2.7 percentage points lower from last year, while return on assets also declined by 0.12 percentage point to 1.2%.

Cost-to-income ratio was at 56.4% as of September, up from 52.5% the previous year.

Overall, the bank’s assets stood at P1.96 trillion as of end-September, up 8.9%, while total capital was at P245.93 billion, higher by 37.4% driven by its P50-billion stock rights offer in May.

Capital adequacy ratio was at P16.99%, while its common equity Tier 1 ratio stood at 16.09%.

BPI raised $600 million in the international bond market in August through a drawdown from its $2-billion medium-term note program. The five-year senior unsecured fixed rate S notes, which carry 4.25% coupon rate, was listed on the Singapore Stock Exchange with a “Baa2” rating assigned by Moody’s Investor Service, a notch above the minimum investment grade.

The bank is also set to raise P50 billion through peso-denominated bonds or commercial papers as approved during its Sept. 19 board meeting.

BPI shares gained P2.80 or 3.51% to close at P82.60 each on Wednesday. — Karl Angelo N. Vidal