BPI looks to increase share of sustainability in loan portfolio

​BANK of the Philippine Islands (BPI) is working on ramping up the share of sustainability initiatives in their overall lending portfolio, even as it already takes up over half of the total, a senior official said.

“If you look more broadly at sustainability overall, what I can say is that about 52% of our portfolio is linked to sustainability initiatives,” BPI Chief Finance Officer (CFO) and Chief Sustainability Officer Eric Roberto M. Luchangco said in a press conference on Thursday.

“That means not just environmental, but even the social side and even governance. Across the environmental, social, and governance side, it’s about 52% of our entire portfolio,” he added.

He noted that there is still “room to grow” for the share of sustainability in its portfolio.

“Green assets have been increasing (in) absolute amount and even as a percentage of our portfolio. So it continues to be a growth area for us,” he said.

In particular, Mr. Luchangco said that a majority of their energy generation portfolio is in renewable energy.

“Over 50% of our power generation portfolio is in renewable energy. Meanwhile, coal-fired has dropped significantly. And I think this compares very favorably compared to the overall grid in which it is over 50% powered by coal.”

Meanwhile, Mr. Luchangco said that the bank is continuously working on expanding its lineup of sustainability-related products.

“We’re always looking for new products that will kind of broaden our sustainability product portfolio. It has to be something that’s interesting to our customers where we see customer demand and where we’re able to find good partners to work with.”

BPI will also offer more sustainability and green bonds in the future, Mr. Luchangco said.

“It’s always an area of interest for us. I think it’s a matter of timing. Issuing green bonds is important to us. But we do have to time it with the financing requirements as well. What you’ll see is that over time, we will issue more green bonds,” he said.

The bank is also working on setting up a framework for when it plans to issue blue bonds.

“We expect to have a strong reception for that. We’d be keen to come into an issue. So, we do expect strong demand for that at the time that we decide to come to the market.”

Last year, the central bank approved a gradual reduction in the reserve requirement rate for green, social, sustainability, and other sustainable bonds to encourage banks to extend more loans for green and sustainable projects. 

BPI saw its net income grow by 25.8% year on year in the first quarter to P15.3 billion as higher revenues helped offset increases in loan loss provisions and operating expenses.

Profit growth is expected to be flat, depending on when the Bangko Sentral ng Pilipinas cuts interest rates, BPI Chief Executive Officer Jose Teodoro K. Limcaoco said last month.

The bank also expects its loans to grow by 11-12% this year, driven by a 6% boost following its merger with Robinsons Bank Corp., Mr. Luchangco said last month.

BPI’s shares went down by 60 centavos or 0.5% to end at P120.20 apiece on Thursday. — Luisa Maria Jacinta C. Jocson