BPI net profit up by 15% to record-high P18.8B

MANILA, Philippines—ayala-led Bank of the Philippine Islands posted a record-high net profit of P18.8 billion last year, 15 percent more than the previous year, as core businesses expanded alongside extraordinary trading gains.

This 2013 performance translated to a return on equity of 18 percent and was slightly better than the P18.4 billion full-year profit guidance earlier given by BPI. The increase in profits was buoyed by a 10-percent growth in net interest income as BPI expanded its loan book by 21 percent to P635 billion. Non-interest income also increased by 11 percent on higher fees and commissions as well as other operating income.

The bank also expanded its balance sheet to breach the P1 trillion mark, ending the year with P1.2 trillion in resources, or 21 percent higher than the previous year. Funding was boosted by a 23-percent expansion in deposits to P989 billion, driven by low-cost savings and demand deposits which rose by over 40 percent.

BPI has also completed a P25-billion capital buildup program through a stock rights offer, preparing itself for growth in a regime of tighter capital adequacy requirements.

The equity deal boosts BPI’s core or tier 1 capital adequacy ratio (CAR) from 14.7 percent to 18.6 percent of risk assets, cementing its place as one of the Philippines’ most well-capitalized banks.

The rights offer recently completed by BPI also marked the biggest capital market transaction done by the bank in its 162-year history, the bank said in a statement.

The new shares will be listed on the local stock exchange on Feb. 10.

“This transaction is about confidence on the part of our shareholders on the growth prospects of our country, our clients and our bank. We are grateful for their overwhelming vote of confidence in the bank’s ability to execute on its growth strategy,” BPI president Cezar Consing said.

BPI sold 370.37 million new common shares to existing shareholders at P67.50 each. Shareholders who subscribed to the offering got one new share for every 9.602 existing common shares held.

The bank reported “very strong support” from BPI shareholders, both domestic and foreign, with 99-percent take-up and more than P33.5 billion in subscriptions. A significant majority of shareholders applied to subscribe to more than their pro-rata share in the rights offer, the bank said.

The bank’s major shareholders, Ayala Corp. and Ayala DBS Holdings Inc. (a company held by Ayala Corp. and Government of Singapore Investment Corp.), subscribed to the rights offer.

BPI Capital Corp. was the sole global coordinator, domestic bookrunner and local underwriter for the rights offer. Goldman Sachs and J.P. Morgan acted as joint international bookrunners and underwriters.