BANK OF THE Philippine Islands (BPI) saw its net income drop by 25.7% last year as it set aside bigger loan loss provisions, with the coronavirus pandemic continuing to affect the economy.

The Ayala-led bank’s net profit went down to P21.4 billion in 2020 from P28.8 billion in 2019, it said in a disclosure to the local bourse on Thursday.

This translated to a return on equity of 7.7%, down from 10.97% in 2019, while return on assets stood at 0.98%, lower than the prior year’s 1.38%.

BPI attributed the income decline to higher provisioning for credit losses on expectations that the economy’s slowdown would lead to higher nonperforming loans (NPL). Its loan loss reserves stood at P28 billion last year, five times as much as the P5.6 billion it set aside in 2019.

Meanwhile, its NPL ratio stood at 2.68%, higher than the end-2019 level of 1.66%, based on its annual report for that year. Its NPL coverage ratio was at 115.2% last year, up from the end-2019 level of 102.1%.

BPI’s revenues climbed by 10.5% year on year to P101.9 billion in 2020. Its net interest income grew by 10.2% to P72.3 billion on the back of a 5.8% increase in its average asset base and a 14-basis-point rise in net interest margin to 3.49%.

Non-interest income also went up by 11.1% from a year ago to P29.7 billion on bigger gains from securities trading. This, even as income from fees fell 5% to P19.5 billion.

The bank’s operating expenses were almost steady at P48.1 billion last year, but its cost-to-income ratio improved to 47.2% from the 52.4% seen in 2019.

BPI saw a 4.6% drop in its loan portfolio to P1.4 trillion last year “as a result of a slowdown in corporate lending.” The main contributors to the decline were the mortgage and microfinance loan segments, it said, which expanded by just 6.6% and 5.7%, respectively.

Meanwhile, deposits with the bank edged up by 1.2% year on year to P1.7 trillion. The bank said the 16.6% growth in current account, savings account or CASA deposits partially offset the 33.2% decline in time deposits. BPI’s CASA ratio stood at 79.6% last year, while its loan-to-deposit ratio was at 82%.

BPI’s assets grew by 1.3% to P2.2 trillion at end-2020. Total equity was a P279.8 billion, translating to a common equity Tier 1 ratio of 16.2%, up from 15.17% in 2019 and a capital adequacy ratio of 17.1%, also higher than the prior year’s 16.07%.

Shares in BPI closed unchanged at P83.15 apiece on Thursday. — BML

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