BDO UNIBANK, INC. (BDO) saw its net earnings plunge by 36.2% to P28.2 billion last year from P44.2 billion in 2019 due to increased loss provisioning on expectations that soured loans would spike amid the coronavirus pandemic.

The Sy-led lender said in a press release on Wednesday that it set aside P30.2 billion in loan loss reserves last year, 387% bigger than the P6.2 billion the year prior, based on its 2019 annual report.

The bank’s nonperforming loan ratio hit 2.65% in 2020, up from the 1.2% logged in 2019. Its bad loan cover, meanwhile, declined to 109.5% from 164.7%.

Last year’s loan loss reserves “are considered more than sufficient to cover for potential losses” as these are equivalent to 3% of gross consumer loans, the bank said.

BDO’s net interest income went up by 12% to P133.7 billion last year, while its loan portfolio inched up by 3% to P2.3 trillion, driven by consumer and corporate sectors.

Non-interest income, meanwhile, went down by 8% to P55.2 billion.

“Business volumes were initially impacted by mobility restrictions, but have since begun to recover gradually,” it said.

Without citing specific numbers, the bank said its trust volumes and fees income still recorded increases last year, while trading gains rose on “favorable market conditions” and insurance premiums saw a modest increase.

BDO’s current account and savings account (CASA) deposits also grew 17% year on year to P2.1 trillion as banking services remained accessible to clients during the long lockdown period, it said.

Meanwhile, the bank’s operating expenses went down by 2.3% to P112.6 billion after slashing marketing and volume-related spending.

“The bank relied on its strong and resilient business franchise and balance sheet to support core business operations, despite significant hurdles from the pandemic and ensuing economic lockdown,” the bank said.

BDO’s capital base went up by 6% to P393 billion from P370.6 billion in 2019.

Its capital adequacy ratio went up to 14.4% from 14.2% in 2019, while its common equity Tier 1 ratio was also higher at 13.2% than 12.7% previously.

Its book value per share also grew by 6% to P88.11.

The bank said it is “cautiously optimistic on a gradual upturn” this year.

It added that it is planning to boost its information and technology (IT) infrastructure and release more digital products and services.

“With its extensive market reach and devoted workforce, the bank remains committed to providing banking products and services attuned to its customers’ needs. These include digital upgrades that allow easier and safer access to services, such as QR code-based ATM and merchant transactions. These are part of the benefits expected from its ongoing next generation IT upgrade,” the statement read.

Shares in BDO went down by 1.71% to P103.20 apiece on Wednesday. — Beatrice M. Laforga