BDO reports profit of P7.6 B in first 9 months of 2011

MANILA, Philippines—The country’s biggest bank,  Banco de Oro, grew its nine-month net profit by 19 percent to P7.6 billion from a year ago on higher loan volume, fee-based earnings and treasury gains.

The interim results translated to an annualized return on common equity of 11.8 percent, the bank disclosed to the Philippine Stock Exchange on Thursday.

During the period in review, BDO reported that its lending operations posted above-industry growth rates, with gross customer loans rising by 24 percent to P620.8 billion year-on-year compared with the 19-percent industry growth. All market segments registered good growth compared with last year, it added.

Net interest income improved slightly to P25.7 billion compared with P25.35 billion a year ago. On the other hand, non-interest income such as fee-based and treasury gains as well as other miscellaneous income went up by 16 percent year-on-year to P15.3 billion.

Recurring fee-based income from service businesses rose by 17 percent to P8.8 billion from a year ago, driven by strong growth from asset and wealth management, payments and electronic banking, insurance and capital markets.

BDO also reported a 16-percent increase in trading and foreign exchange gains to P5.1 billion from a year ago despite volatile external market conditions.

Despite the growth in the bank’s balance sheet, asset quality improved as its stock of bad loans dipped to 3.9 percent as a ratio of total loans from 4.7 percent at end-2010.

On the funding side, total deposits expanded by 15 percent to P820.6 billion, buoyed by low-cost deposits generated from an expanded branch network. But the robust liquidity in the financial system continued to compress asset yields, resulting in the meager increase in interest earnings despite the double-digit rise in loan volume.