BPI profit hit record high of P16.3B in ’12, up 27%

Ayala bank yields ‘extraordinary’ trading gains

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Ayala-led Bank of the Philippine Islands yielded in 2012 a record-high net profit of P16.3 billion on the back of higher interest earnings and extraordinary trading gains.

The full-year 2012 profit performance marked a 27-percent increase from the previous year and exceeded the P16.07 billion consensus forecast for the period.

This translated to a return on equity of 17.5 percent and a return on assets of 1.9 percent for BPI, the country’s most profitable bank and the most valuable based on stock market capitalization.

In a statement, BPI president and chief executive officer Aurelio R. Montinola III said, “2012 was a banner year for BPI, as we generated record profits and exceeded our return on equity goal of 16 percent.”

“We will aim for 12 to 15 percent loan growth in 2013. However, given significant securities trading gains last year and an even lower interest rate regime this year, our challenge for 2013 will be to deliver a meaningful earnings growth after a record 2012 performance,” he said.

BPI grew its net loan book by 16 percent to P527 billion last year.  A higher loan volume compensated for the slight decline in net interest margins.

Net interest income rose by 6 percent as the average asset base went up by P64 billion while net interest margin posted a 10-basis point contraction following the Bangko Sentral ng Pilipinas’ monetary easing last year and the removal of interest paid on reserve requirement deposits kept with the central bank.

Non-interest income was 25 percent better, mainly due to higher trading gain on securities sold, other operating income as well as other fees commissions.

BPI reported strong business volumes and revenue growth on the back of a robust macroeconomic backdrop.  The Philippine economy expanded by 6.6 percent in 2012.

The bank’s total resources reached P985 billion at yearend, 17 percent higher than the previous year. Deposit base expanded by 18 percent to P802 billion while assets under management ended the year 11 percent higher at P743 billion. BPI’s total intermediated funds thus stood at P1.5 trillion in 2012.

On the asset side, the 16 percent rise in net loan portfolio was supported by double-digit growths across core markets: 17 percent for both the consumer segment and the middle market/small and medium enterprises, and 12 percent for the top tier corporates. Asset quality continued to improve with its 30-day nonperforming loan ratio easing to 1.46 percent from the previous year’s 1.87 percent.

Meanwhile, operating expense growth was managed at 6 percent coming from technology and occupancy-related expenses and regulatory costs. An impairment loss of P2.9 billion was booked due to additional provisions for noncredit related items and foreclosed assets.

BPI’s market capitalization stood at P338 billion as of end-2012.

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