BANK OF THE Philippine Islands (BPI) saw steady income in the first quarter despite improved revenues due to higher expenses and lower trading gains.
In a disclosure on Monday, BPI said it booked P6.25 billion in net earnings in the January to March period, flat from the profit it recorded in the same period last year and 16.4% higher than the P5.37 billion logged in the last quarter of 2017.
The bank’s profit was mostly steady despite an improvement in its revenues due to increased expenses and a decline in trading gains.
BPI said its total revenues climbed 2.7% to P18.45 billion from the P17.96 billion booked last year.
Net interest income was P12.51 billion last quarter, up 8.9% versus the P11.49 billion in a comparable year-ago period.
The Ayala-led lender said interest expenses tempered the growth in its net interest income, partly due to “higher documentary stamp tax rates on deposits which increased the cost of funds by five basis points.”
Meanwhile, total loans stood at P1.21 trillion, 17.2% higher than the P1.03 trillion logged in the first quarter of 2017, driven by corporate loans.
Interest income from loans grew 18.4% year-on-year on the back of an improvement in yields.
Total deposits, on the other hand, reached P1.59 billion, up 10.4% from P1.44 trillion in the comparable year-ago period.
The bank’s current account and savings account ratio stood at 71.6%, while the total loan-to-deposit ratio was at 76.2%.
Its net interest margin widened by four basis points year-on-year, the bank said.
Non-interest income dropped 8.05% to P5.94 billion from the P6.46 billion logged last year due to lower income from trust and investment management fees, securities trading and asset sales.
BPI added that fees from credit cards, bank commissions, stock brokerage and foreign exchange trading were “higher” for the period.
The bank’s total assets grew 10.4% to P1.91 trillion at end-March from the P1.73 trillion seen a year ago.
Operating expenses rose 11.7% to P9.75 billion from P8.73 billion last year as the bank increased spending on technology. Likewise, manpower costs and premises were higher by 9% due to increased headcount and continued increase of microfinance branches.
BPI’s provision for loan losses last quarter declined 35.1% to P785 million as the bank adopted the expected credit loss models under the Philippine Financial Reporting Standards.
In asset quality terms, the bank’s nonperforming loans (NPL) ratio rose slightly to 1.32% from 1.29% in the previous quarter. Reserve cover ratio increased to 130.1% from 129.2% as of December 2017.
Cost-to-income ratio was at 52.8% last quarter, an improvement from 48.6% the previous year.
Return on equity was 13.5%, lower by 1.5 percentage points, while return on assets was 1.4%, lower by 0.11 percentage points compared with the figures logged in the first quarter of last year.
The lender’s capital adequacy ratio was at 13.55%, while its common equity Tier 1 ratio stood at 12.65%.
BPI President and Chief Executive Officer Cezar P. Consing attributed the flat earnings of the bank in the first quarter to “lower trading gains.”
“Trading gains in [the first quarter] were lower than in [the first quarter in 2017],” Mr. Consing told BusinessWorld in an e-mail. “However, overall results for Q1 2018 were in line with our expectations.”
BPI shares dropped 75 centavos or 0.76% to P97.60 each on Monday. — KANV