BDO Unibank Inc., the country’s biggest lender controlled by tycoon Henry Sy, is aiming at a record P31-billion net income this year following a remarkable performance in 2017.
The bank posted a 7-percent increase in net income last year to a record P28.1 billion on strong growth across all business segments and matched the earnings guidance for the year.
The bank said in a disclosure to the stock exchange Friday it was optimistic it could realize another record earnings this year as it “leverages on its strong business franchise and expands in underserved markets amid a challenging and competitive operating landscape.”
The bank registered a net income of P5.9 billion in the first quarter of 2018, steady from the year-ago level.
“Excluding the impact of PFRS 9 [Philippine Financial Reporting Standards] or specifically the mark to market revaluation of the investment portfolio of BDO Life and the ongoing restructuring and expansion costs at One Network Bank, net income would have reflected a 16-percent increase,” the bank said.
Net interest income grew 20 percent to P22.2 billion due to the 18-percent expansion in gross customer loans to P1.8 trillion and the 16-percent hike in total deposits to P2.2 trillion, with low-cost CASA deposits contributing the bulk of total deposit growth.
Insurance premiums rose 20 percent to P2.6 billion, fee-based income increased 2 percent, while trading and foreign exchange gains fell to P24 million. Operating expenses rose 11 percent to P23.1 billion in line with business expansion.
Provisions rose 26 percent to P1.8 billion even as asset quality improved. Non-performing loan ratio was lower at 1.2 percent from 1.3 percent year on year, while NPL cover was higher at 156.4 percent from 137.9 percent a year ago.
Capital base increased to nearly P300 billion, with capital adequacy ratio and common equity Tier 1 at 14.3 percent and 12.6 percent, respectively.
The bank started on Friday the issuance of P5 billion long-term negotiable certificates of deposit in a bid to lengthen the maturity of its funding sources and support business expansion plans.
BDO has the option to increase the issue size, depending on market demand. BDO last issued P11.8 billion worth of LTNCDs in August 2017.
“This latest tranche of LTNCDs will have a term of five and a half years with indicative pricing of 4.5 percent. The final coupon rate will be set prior to or at the end of the offer period. Interest will be paid quarterly in arrears,” the bank told the stock exchange.
The minimum investment is P100,000 with increments of P50,000. The offering period will start from April 20 to April 30, with the issue date set for May 7, 2018.
The bank, however, reserves the right to adjust the timing of the offer as needed.
LTNCDs are negotiable certificates of deposit with a designated maturity, and represent a bank’s obligation to pay the face value upon maturity, with periodic coupon or interest payments during the life of the deposit.