Banco de Oro Unibank, the country’s largest lender, posted a record-high first semester net profit of P14.1 billion, more than double the level posted in the same period last year, as unprecedented trading gains complemented growth in interest earnings.
“With record earnings for the period already representing more than two-thirds of its P20.4 billion guidance for 2013, the bank is optimistic of hitting its year-end targets as it expands its businesses while nimbly responding to market challenges,” BDO disclosed to the Philippine Stock Exchange on Monday.
The first half net profit of tycoon Henry Sy’s banking arm outpaced by 144 percent the P5.8 billion bottom line booked in the same period last year, as BDO reported strong performance across all business segments.
BDO expanded gross customer loans by 12 percent to P806.6 billion while total deposits broke the P1-trillion mark, rising by 17 per cent to P1.02 trillion on sustained increase in low-cost deposits.
Net interest earnings—banks’ main source of recurring income—rose by 14 percent to almost P20 billion from a year ago.
But non-interest income increased at a faster pace of 81 percent year-on-year to P20.3 billion, driven by fee-based service income of P7.6 billion, as well as “exceptional” gains from trading and foreign exchange activities despite the market volatility in late June.
On the expenditure side, the bank kept growth in operating expense steady at 9 percent.
In terms of asset quality, the ratio of non-performing loans (NPL) to total loan portfolio stood at 2.4 percent. Despite the decline in soured loan ratio, BDO accelerated its loan-loss provisioning to P4 billion to boost its NPL coverage ratio to 148 percent, “reflective of its conservative provisioning policy,” the bank said.
Capital adequacy ratios to risk assets also remained above the regulatory minimum, ending June at 18.3 percent overall and 15.6 percent, for core or tier 1 capital ratio.
Meanwhile, BDO obtained board approval to redeem the bank’s remaining subordinated debt notes qualifying as tier 2 capital amounting to a total of P18 billion.