BDO Leasing books net loss in Q2

BDO Leasing and Finance, Inc. (BDOLF) posted a net loss in the second quarter dragged by compressed margins.

According to its quarterly report posted on the local bourse on Thursday, the leasing and financing arm of Sy-led BDO Unibank, Inc. said it booked a net loss of P4.7 million, a reversal of P88.2 million net income tallied in the April-June period last year.

BDOLF attributed its net loss last quarter to “margin compression.”

“[T]he company’s liabilities, which are short-term in nature, adjusted faster to current interest rates as compared to its lease receivables, which typically carry fixed interest rates for 3-5 years,” the firm said.

BDOLF’s revenues stood at P749.3 million in the second quarter, 6.5% lower than the P801 million booked a year ago, as services and other income dropped to P39.3 million from P95.1 million in the second quarter last year.

Loans and receivables stood at P28.7 billion, which BDOLF said was “largely due to the sale of a portion of its lower-yielding portfolio earlier this year to mitigate the impact of compressed margins.”

“These resulted as funding costs, which increased substantially with the rapid rise in interest rates last year, adjusted faster than asset yields,” it added.

On the other hand, expenses climbed nine percent to P746.6 million from P684.7 million in the comparative year-ago period. This was driven by interest and financing charges, which grew 50.6% to P398.2 million from P264.4 million.

Overall, total assets declined 13% year-on-year to P35.7 billion.

Despite logging a net loss, BDOLF said this is seen as a temporary situation as “the sale of the company’s lower-yielding portfolio, combined with the application of prevailing interest rates to new loan bookings and the re-pricing of existing loans, is expected to result in a recovery in margins in the second half of 2019.”

Shares in BDOLF went down six centavos or 2.60% to close at P2.25 each on Thursday. — K.A.N. Vidal