BDO UNIBANK, Inc. (BDO) saw its net income surge in the third quarter of the year due to higher recurring core revenues.

The Sy-led lender saw its net earnings jump by 43.35% to P11.967 billion in the July-September period from P8.348 billion a year ago, its quarterly report released yesterday showed.

This brought its nine-month income to P32.1 billion, up 49.3% from the P21.5 billion reported in the same period in 2018.

The bank said in a separate statement that the increase in its net earnings was mainly driven by the expansion in its recurring core revenues, translating to a 12.5% return on common equity.

With “improved” net interest margins, the lender’s net interest income grew 23.54% to P31.54 billion in the third quarter from P25.53 billion in the same period last year, taking it to P88.5 billion at end-September.

Its customer loans went up six percent to P2.1 trillion as of end-September, which the bank said was on the back of a sustained increase in credit to both the middle-market and consumer segments. Its gross nonperforming loan ratio (NPL) was maintained at 1.2%, while the NPL cover was at 168.2%

Meanwhile, the bank’s deposits went up by three percent year-on-year to P2.4 trillion during the first nine months. Low-cost current account savings account deposits accounted for 72% of this total, growing by six percent year-on-year.

Its total income from other operations likewise grew to P14.61 billion in the third quarter, up by 12.85% from the P12.95 billion from a year ago, bringing the nine-month total to P44.1 billion.

Broken down, earnings from service charges, fees and commissions grew 12.95% to P7.85 billion in the third quarter from P6.77 billion last year, trust fees went up around 10% to P905 million from last year’s P823 million, insurance premiums jumped 26.13% to P3.91 billion from P3.1 billion, and miscellaneous income inched up by 1.61% to P1.26 billion from the year-ago figure of P1.24 billion.

Meanwhile, trading and foreign exchange gains in the third quarter declined to P690 million from the P1 billion recorded a year ago, taking the nine-month total to P4.3 billion, a “normalized level compared to 2018 when a more volatile environment prevailed,” BDO said.

The bank’s total operating expenses grew 17.65% to P29.33 billion last quarter from P24.93 billion a year ago. In the nine months ended September, BDO’s operating expenses also climbed 20% to P85.8 billion, mainly from business expansions and volume-related expenses such as taxes and licenses and policy reserves in its life insurance subsidiary, BDO Life Assurance Company, Inc. which grew 42%, the bank said.

“Excluding volume-related expenses, operating expenses should have risen by 14%,” it added.

The lender has set aside provisions worth P4.2 billion as the it “maintained its conservative credit and provisioning policies.”

Meanwhile, the bank’s capital base grew to P364 billion, with its common equity Tier 1 ratio at 13.1% and capital adequacy ratio at 14.6%.

“With its focused growth strategy, strong business franchise, solid balance sheet and extensive geographic reach, the bank remains solidly positioned to capitalize on the country’s solid economic pace and growth opportunities in underserved and emerging markets,” the bank said.

Currently, BDO has over 1,300 operating branches and more than 4,400 automated teller machines across the country.

As of June 30, the bank said it was the largest bank in the country in terms of total assets, loans,deposits and trust funds under management.

BDO shares closed at P152 apiece on Monday, up P4.20 or by 2.84%. — Beatrice M. Laforga