By Karl Angelo N. Vidal, Reporter

BANK OF THE Philippine Islands recorded higher net earnings in the first quarter of the year, propelled by robust net interest income growth.

In a regulatory filing Thursday, the Ayala-led lender said it posted a P6.72-billion net income in the first three months of the year, up 7.6% from the P6.25 billion logged in the same quarter in 2018.

BPI Chief Financial Officer Maria Theresa Marcial Javier said “very strong” net interest income drove the bank’s first-quarter earnings growth.

Net interest income grew 28.8% year-on-year to P16.05 billion, driven by an 8.8% increase in average asset base and a 50-basis point expansion in its net interest margin to 3.39%.

“Our net interest margin expansion is actually the highest in probably a decade,” Ms. Javier said on the sidelines of the bank’s annual stockholders’ meeting (ASM). “That’s really driven by higher loan repricing across credit products, including corporates as well as some parts of our SME (small and medium enterprises), plus the continued growth in our credit card and mortgage businesses.”

Total loans as of end-March were at P1.35 trillion, an 11.5% growth from the comparable year-ago period, on the back of robust expansion in corporate, credit card and housing loans at 11.8%, 20.3% and 9.9%, respectively.

The bank’s nonperforming loan ratio stood at 1.85%, while the bank’s total loss coverage, including allowances for contingent exposures, stood at 95.7%.

Total deposits meanwhile climbed 1.3% to P1.61 trillion, with its current and savings account ratio at 70.3%, while loan-to-deposit ratio stood at 83.9%.

The bank’s non-interest income, on the other hand, grew 12.4% to P6.73 billion in the first quarter, driven by an increase in transaction-based service charges, credit card and rental business, as well as income from sold assets.

Revenues for the first quarter increased by 23.5% to P22.78 billion.

Operating expenses also increased 23.8% year-on-year to P12.07 billion in the January-March period, reflecting BPI’s continued investments in technology, digitalization, as well as the branch network of its microfinance arm BPI Direct BanKo.

BPI set aside P1.8 billion in provision for losses in the quarter, down 13.2% from the last quarter of 2018.

At end-March, the bank’s total assets were at P2.08 trillion, up 8.9% from a year ago. Total capital grew 35.6% to P257.11 billion, driven by the stock rights offering conducted by the lender last May 2018.

Return on assets and return on equity stood at 1.34% and 10.7%, respectively.

The bank’s capital adequacy ratio stood at 16.57%, while common equity Tier 1 ratio was at 15.68%.

For this year, BPI’s budget for capital expenditures is at P6 billion, which will be used for the branch expansion and digitalization push.

The bank is eyeing to put up 14 BPI branches this year, half of which will be placed in Visayas and Mindanao. On top of these will be the 100 additional branches and branch-lite units of BPI Direct BanKo for 2019 to end the year with a network of 300 offices.

DIGITAL TRANSFORMATION
Earlier this month, the bank underwent a three-day deposits system upgrade, making changes to more than 41,000 programs, lines of codes, and copy books, prompting the bank to suspend the operations of some of its banking services.

However, the unavailability of BPI’s mobile and online channels extended days beyond the stipulated time for some of its customers.

“We think we got the hard parts behind us. We’ve made these 41,000 changes…” BPI President and Chief Executive Officer Cezar P. Consing said.

“We’ve got the connections up so that changes we make later on will be much seamless. It’s like changing the house you live in, but at the same time staying in that house. But you have to make changes.”

He added that the bank is set to embark on the second phase of its digital transformation journey, focusing on payments, SMEs and financial inclusion, among others.

“As the world becomes increasingly digitalized, embarking on this journey is a critical step to maintaining the competitive advantage of our franchise and growing our business,” Mr. Consing said during the ASM.

“A successful execution of phase two of our digitalization journey could contribute an additional 20% revenue uplift over and above out base case projections by 2023.”

Shares in BPI stood at P81.50 apiece on Thursday, down 50 centavos or 0.61%.

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