BDO UNIBANK, Inc. has increased its loan loss provisions to P22.1 billion as it factored in the impact of the coronavirus disease 2019 (COVID-19) and the government’s lockdown measures.

In a filing with the local bourse on Monday, BDO said it is boosting its loan provisions by P20 billion, which will add to the P2.1 billion it had already set aside in the first quarter.

“The move, following a comprehensive review of its loan portfolio, is anticipatory in nature and is meant to safeguard the bank’s balance sheet,” the bank said.

“With these additional provisions, BDO expects that its coverage ratio will remain strong and among the highest in the country,” it added.

The Sy-led lender said it will also allocate a total of 170 basis points as anticipated credit costs for the pandemic.

Citing government estimates that economic output could shrink by as much as 3.4% this year, BDO is factoring in a possible increase in delinquencies due to the disruptions in business operations, tightness in corporate activity, as well as a drop in consumption.

“While the bank expects an increase in the NPL (nonperforming loan) ratio, actual write-offs or losses are seen to be much less. Despite the additional provisions, the bank’s capital adequacy ratio is expected to remain stable…,” BDO said.

The lender’s NPL ratio was at 1.3% in the first quarter, while NPL cover was at 151.4%.

BDO’s capital adequacy ratio stood at 13.8% while common equity Tier 1 ratio was at 12.7% as of the first quarter. Total capital base reached P372.2 billion.

Aside from the additional loan loss provisions, BDO also declared cash dividends for the second quarter at P0.30 per share payable on June 29 to all stockholders of record as of June 17.

The bank’s net income dropped by 10.2% to P8.8 billion in the January to March period from the P9.8 billion recorded a year ago, dragged by the impact of the weak capital market to its investment portfolio. Meanwhile, net interest income amounted to P33 billion.

BDO’s shares ended trading at P99 apiece on Monday, down by P1.40 or by 1.39% from its Friday close. — L.W.T. Noble

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