BANK OF THE Philippine Islands (BPI) posted a lower net income in the third quarter as it continued to increase its loan loss reserves amid the coronavirus pandemic.

The Ayala-led bank’s net income dropped 33.7% to P5.5 billion in the third quarter from the P8.29 billion it booked in the same period last year, it said in a disclosure to the local bourse on Wednesday.

This brought BPI’s net profit for the first nine months of the year to P17.17 billion, down 22.1% from the P22.03 billion booked in the comparable year-ago period.

This translated to a return on equity of 8.32%, while its return on assets was at 1.05%. 

The bank’s loan loss provisions stood at P21.06 billion in the first nine months, more than four times the P4.58 billion it set aside in the same period last year. BPI said it ramped up its provisioning “in anticipation of an increase in NPL (non-performing loan) levels in light of the continued weakness in the economic landscape.”

BPI’s revenues in the nine-month period rose 9.7% year-on-year to P77.88 billion.

The lender’s net interest income grew by 11.8% to P54.4 billion at end-September, which it said was driven by the 5.7% expansion in its average asset base supported by an 18-basis-point widening in its net interest margin to 3.51%. 

BPI’s loan portfolio stood at P1.38 trillion as of September, up 0.9% from the previous year. The bank said this increase was on the back of a 8.7% growth in mortgage loans and a 2.6% rise in corporate lending.

Meanwhile, deposits with the bank increased four percent year-on-year to P1.68 trillion on the back of a 14.7% growth in current account, savings account or CASA deposits.

The bank’s CASA ratio stood at 76.2% while its loan-to-deposit ratio was at 82.1%.

BPI posted an NPL ratio of 2.98% in the third quarter. Its NPL coverage ratio, meanwhile, stood at 100.4%.

On the other hand, the bank posted a non-interest income of P23.48 billion in the first nine months, climbing 5.1% from the year-ago level, boosted by “robust” gains from securities trading.

BPI’s total operating expenses dropped 1.6% to P36.48 billion at end-September due to “lower premises, technology, and various discretionary costs such as marketing, advertising, and management and professional fees,” it said. This brought the cost-to-income ratio to 46.8%, lower than the 52.2% recorded in the prior year.

The lender’s assets totalled P2.2 trillion at end-September, growing 3.6% from the previous year, while equity stood at P283.44 billion.

Its common equity Tier 1 ratio was at 15.46% while its capital adequacy ratio stood at 16.35%, both well above regulatory requirements.

BPI shares closed at P75.80 apiece on Wednesday, rising P6.80 or 9.86% from the previous day’s finish.