BDO UNIBANK, Inc. saw its earnings climb in the third quarter on the back of the robust expansion of its key businesses.
In a regulatory filing on Monday, the Sy-led BDO said it booked a net profit of P8.4 billion in the July-September period, 18.6% higher than the P7.08 billion logged a year ago.
This brought BDO’s income in the nine months ended September to P21.5 billion, up 6% from the P20.4 billion in a comparable year-ago period.
Excluding BDO Life, which was impacted by mark to market on its investment portfolio brought by Philippine Financial Reporting Standards 9, as well as its ongoing investment in the micro, small and medium enterprise lending business, BDO said its year-to-date income would have registered a 13% growth from a year ago.
The bank attributed the earnings growth to the “solid expansion from its core lending and deposit-taking, life insurance and fee-based businesses.”
BDO’s net interest income stood at P71.5 billion in the first nine months of the year, higher by 20% from a year ago.
Its lending business grew 17% to almost P2 trillion at end-September, driven by the middle market and consumer segments.
Deposits stood at P2.3 trillion, up 12% from a year ago, with low-cost current account, savings account (CASA) ratio stable at 70%.
The bank’s net interest margin also increased year-on-year and quarter-on-quarter due to “upward loan re-pricing and managed funding costs given a large low-cost CASA base.”
On the other hand, non-interest income grew to P35.8 billion in the nine months ended September, supported by insurance premiums and fee-based earnings, which grew by 21% and 7% respectively.
However, these were offset by the 71% decline in trading and foreign exchange gains brought by the continuing volatility in the capital markets.
Overall, gross operating income grew to P107.3 billion in the third quarter, higher by 13%.
Likewise, operating expenses grew 13% to P71.7 billion in the nine months ending September, as business and branch expansion were sustained. The higher documentary stamp tax on time deposits, which doubled due to the government’s tax reform program implemented this year.
Volume-related operating expenses, comprising 41% of the total operating expenses, grew 14%.
The bank set aside P5.5 billion in provisions, even as its gross non-performing loan (NPL) ratio dropped to 1.1% in the third quarter versus 1.2% in the previous quarter as well as the 1.3% a year ago.
NPL cover likewise increased to 175% from the 158% booked in the second quarter and 136% last year.
BDO’s total capital increased to P311.8 billion, with both its common equity Tier 1 and capital adequacy ratios well above the minimum regulatory requirements at 12.3% and 13.9%, respectively.
“With the positive performance in the first nine months this year, the bank believes that the 2018 full-year earnings guidance of P31 billion remains within reach given the seasonally stronger fourth quarter, combined with encouraging results from the bank’s strategic initiatives expanding across underserved segments and growth areas,” the bank said.
Last month, BDO, the country’s biggest bank in asset terms, has established a peso-denominated bond program of up to P100 billion, even as it said it has no definite timeline yet for an issuance.
BDO shares closed at P118.30 apiece on Monday, up P2.30 or 1.98%. — Karl Angelo N. Vidal