BDO sees 2019 net income rising 18% to record P38.5b

BDO Unibank Inc., the country’s largest lender controlled by the Sy family, is eyeing an 18-percent growth in 2019 net income to a record P38.5 billion from P32.7 billion in 2018 despite the local and external risks that may threaten growth, a top executive said Monday.

BDO president and chief executive Nestor Tan said the outlook for the bank remained bright after the bank posted a 66-percent growth in profit in the first quarter to P9.8 billion from P5.9 billion a year ago.

BDO sees 2019 net income rising 18% to record P38.5b
BDO stockholders meeting.  BDO Unibank Inc. chairperson Teresita Sy (second from right) leads the bank’s 2019 annual stockholders meeting at Conrad Hotel Manila in Pasay City. With Sy are (from left) vice chairman Jesus Jacinti Jr., president and chief executive Nestor Tan and independent director Gilberto Teodoro. Bobby Cabrera
“BDO set its earnings guidance at P38.5 billion for the full-year 2019 as the bank leverages on its strong business franchise and extensive distribution network while executing its strategy to expand across high-growth areas and underserved segments,” Tan said in a news briefing at the sidelines of the bank’s annual stockholders’ meeting at Conrad Hotel in Pasay City.

Tan said he was expecting a rebound in consumer demand as inflation rate settled at 3.8 percent in the first quarter within the government’s official target range of 2 percent to 4 percent.

“We also expect the election-related spending will continue to boost consumption,” Tan said.

He said that despite the rosy outlook, some risks could stifle the growth of the banking industry and the economy in general. These are the lingering trade tensions between the US and China and the results of the approaching mid-term elections.

“The trade war will affect us... Also there are some uncertainties on the results of the coming elections,” he said, adding investors would likely wait and see the outcome of the political exercise on May 13. He said the volatile interest rates could be another factor.

Tan said the first-quarter results were driven by the continued expansion of core banking operations, recovery of trading gains to a normal level and strong results from bank fees and life insurance premiums.

He said net interest income was a major earnings driver, rising to P27.7 billion on the continued growth in customer loans and current account and savings account expansion, resulting in higher net interest margins.

Non-interest income hit P14.9 billion, led by banking fees and insurance premiums. Trading and foreign exchange gains normalized to P2.2 billion from P24 million a year ago, given the adverse market conditions in the first quarter of 2018 when the market declined 7 percent.

Operating expenses rose 22 percent to P28.3 billion. Exclusive of policy reserves and volume-related expenses, operating expenses growth would have been 13 percent on the continuing business and branch expansion and IT upgrades.

Tan said the BDO Group, including subsidiary One Network Bank, was planning to put up around 50 to 70 branches this year, a norm for the bank in the past 10 years.

He said the new branches would be located in strategic places in the country, including the underserved areas.

The bank’s capital base stood at P338. 4 billion, with capital adequacy ratio and common equity tier 1 ratio at 14 percent and 12.4 percent, respectively.

BDO ranked as the largest bank in terms of total assets, loans, deposits and trust funds under management based on published statements of condition as of Dec. 31, 2018.

BDO’s net income jumped 17 percent in 2018 to a record P32.7 billion from P28.1 billion in 2017, on the sustained strength of its core businesses. The 2018 net profit also surpassed the P31-billion guidance set by the bank for the year.

The bank also capped another milestone as the first Philippine bank to breach the P3-trillion mark in total assets.

Topics: BDO Unibank Inc. , net income
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