BANK of the Philippine Islands (BPI) reported a lower net income as of end-June following one-off gains from the sale of securities a year ago, coupled with higher operating costs as the lender spent more for technology upgrades.

The Ayala-owned lender reported an P11.7-billion net profit for the first semester, down 7.7% from the P12.6 billion tallied during the first six months of 2016, it said in a disclosure to the Philippine Stock Exchange yesterday.

Net revenues stood flat at P35.3 billion, with the increase in interest income offset by lower non-interest profits.

The country’s third biggest bank in asset terms said interest income rose by 13.6% to P23.5 billion, which came alongside an 18.4% slide in other revenue sources to just P11.8 billion.

BPI reported lower securities trading gains as of end-June due to the sale of securities a year ago, as the lender raised fresh funds which were deployed to loans and additional bank capital.

“The absence of one-off trading gains in 2017 H1 was partially offset by higher fee-based income, which grew at a robust pace of 17.8% year-on-year driven by cards and payments, service charges, and investment banking,” the bank said in a statement.

Netting out the sale of hold-to-maturity debt notes, BPI said net income picked up by 48% from a year ago.

Total loans reached P1.1 trillion, surging by 16.9% from P904.38 billion from January-June 2016 as corporate lending grew by a fifth. Deposits likewise climbed by 8% to reach P1.4 trillion from P1.33 trillion posted in end-June 2016.

Return on equity also slipped to 13.7% from 16.4% a year ago, while return on assets likewise dipped to 1.4% from 1.6% previously.

On the other hand, the bank’s operating expenses rose by 5.4% to P18.3 billion, attributed to higher spending on technology and regulatory costs.

BPI faced a two-day interruption in its electronic banking services after an internal processing error led to incorrect balances posted for 1.5 million clients on June 7 and 8. It took the bank some 37 hours to correct the account balances and had to shut down access to online banking channels and automated teller machines (ATMs).

Despite this, the bank said it held more than enough capital buffers at 13.7% of total assets, which is well above the 10% standard set by the Bangko Sentral ng Pilipinas. The lender also set aside more reserves versus potential loan defaults, even as the share of soured debts declined further to 1.5% from 1.6% previously.

BPI shares rose to end at P105.40 apiece yesterday, gaining 1.74% from P103.60 on Wednesday. — Melissa Luz T. Lopez

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