By Melissa Luz T. Lopez, Senior Reporter
BDO Unibank, Inc. said net profit was little changed in the first quarter at P5.9 billion, behind the pace on its full-year profit guidance of P31 billion.
The P5.9 billion profit in the three months to March was slightly higher than the P5.8 billion reported a year earlier, the bank said in a disclosure on Friday.
Profit derived from loans rose by a fifth year-on-year to P22.2 billion, the bank said, after an 18% rise in loan volume to P1.8 trillion. Despite the loan growth, the share of bad loans declined to 1.2% from 1.3% a year earlier.
The expansion in credit was accompanied by a 16% rise in total deposits to P2.2 trillion.
However, mark-to-market revaluation of the investment portfolio of its subsidiary BDO Life Assurance Co., Inc. as well as restructuring and expansion costs of rural lender One Network Bank dampened the bank’s performance.
Excluding these factors, BDO said net profit would have risen 16% year-on-year.
The bank also booked additional profit from higher insurance premiums, which grew by a fifth to P2.6 billion. Fee-based income also rose 2%, while gains from foreign exchange trading dropped on the back of a weaker peso.
“Additionally, BDO disclosed its earnings guidance of P31 billion for the full-year 2018, as it leverages on its strong business franchise and expands in underserved markets amid a challenging and competitive operating landscape,” BDO said in a statement.
If realized, 2018 earnings would be a record after the bank earned P28.1 billion in 2017.
The bank said capital buffers were nearly P300 billion, with the capital adequacy ratio at 14.3%, well above the 10% standard set by the central bank.
The country’s biggest bank is also looking to raise P5 billion worth of long-term notes to raise fresh capital to refinance debt and fund expansion.
The listed lender told the Philippine Stock Exchange on Friday that it started offering long-term negotiable certificates of deposit (LNTCDs), which will mature in 5.5 years. The latest tranche of debt was initially priced at 4.5%, with the final coupon to be set when the offer period ends on April 30.
LTNCDs, like regular time deposits, offer higher interest rates but unlike time deposits, cannot be pre-terminated. Being “negotiable” means that these can be sold on the secondary market. Interest will be paid quarterly in arrears, with interest income exempted from withholding tax if the debt is held for at least five years.
BDO last tapped long-term notes in August 2017, when it was able to raise P11.8 billion — double the original P5-billion plan. These notes carry a 3.625% interest rate and will mature on Feb. 18, 2023.
BDO said the fresh capital-raising exercise will help the bank “lengthen the maturity of its funding sources and support business expansion plans.”
Investors can avail of the note offer with a minimum investment of P100,000, plus increments of P50,000. The issue date is May 7.
BDO tapped Deutsche Bank AG’s, Manila Branch and ING Bank N. V.’s Manila Branch as the joint lead arrangers and selling agents for the issuance.
BDO and BDO Private Bank will serve as selling agents.
BDO shares closed at P134, up from P133.60 Thursday.

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