P23.8-b worth of provisions pared BDO’s 9-month income to P16.6b

BDO Unibank Inc., the country’s largest bank controlled by the Sy family, said Monday net income in the first nine months declined 48 percent to P16.6 billion from P32.1 billion a year ago because of the upfront provisions amounting to P23.8 billion in anticipation of potential delinquencies amid the pandemic.

“The bank recognizes that the pandemic difficulties still lie ahead. The delinquency problem on loans have not yet peaked, interest rate caps on credit cards will be instituted soon and there are added costs in doing business as a result of necessary precautions inherent in the bank’s operations,” the bank said in a disclosure to the stock exchange Monday.

“All of these and more are seen to put pressure on the bank’s earnings,” it said.

Outstanding loans increased 6 percent to P2.2 trillion as of end-September, driven by corporate and consumer accounts. The bank said it remained supportive of borrowing clients, ensuring continued access to their credit facilities to help them manage their funding requirements during these challenging times, notwithstanding loan payment deferments under Bayanihan 1 and 2.

Asset quality remained stable, with gross non-performing loans ratio at 1.97 percent. Meanwhile, the NPL cover settled at 138 percent.

Total provisions in the first nine months amounted to P23.8 billion, inclusive of the pre-emptive provisions in the second quarter 2020.

Total deposits grew to P2.6 trillion, on the faster growth in current account/savings account (CASA) deposits, with almost all of the bank’s branches operational since the second quarter.

CASA ratio climbed to a new high of 79 percent. Net interest income went up by 13 percent year-on-year to P99.8 billion.

Non-interest income settled at P36.8 billion, led by fee-based income and insurance premiums with P20.2 billion and P10.9 billion, respectively.

“Wealth management remained resilient with trust volume and fees sustaining steady growth despite soft market conditions. However, some of the bank’s businesses, specifically those that rely on face-to-face interaction, are still gradually rebuilding their volumes,” it said.

Operating expenses declined by 3 percent to P83.6 billion on lower volume-related expenses.

The bank’s balance sheet remained solid with a capital base of P378.6 billion. Capital adequacy ratio and common equity tier 1 ratio were at 14.3 percent and 13.2 percent, respectively, both above regulatory minimum.

“BDO believes that its strong business franchise and robust balance sheet place the bank in a good position to leverage on a post-pandemic economic recovery,” it said.

Topics: BDO Unibank Inc. , Sy family , net income
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