BPI 6-month profit up 52% to P9.4B

MANILA, Philippines—Ayala-led Bank of the Philippine Islands (BPI) grew its six-month net income by 52 percent year on year to P9.4 billion.

The bank attributed the profit growth to strong interest earnings, improved loan margins and hefty treasury gains, particularly in the first quarter.

The first-semester results already accounted for 63.5 percent of the market consensus profit forecast of P14.8 billion for the whole year. The profit translated to a 21-percent return on equity and a 2.3-percent return on assets, the bank disclosed to the Philippine Stock Exchange on Wednesday.

For the second quarter alone, BPI’s net income rose by 8 percent year on year to P3.6 billion, contributing 38 percent of the semester’s bottom line even if the extraordinary trading gains that boosted first-quarter results could not be replicated. Net interest income rose in the second quarter but this was tempered by the higher tax line.

Loan growth across all segments was sustained as net loan portfolio reached P480 billion, up by 17 percent from a year ago. Both the middle market and small and medium enterprise (SME) segments posted a 19-percent growth while the top corporate segment went up by 15 percent. Consumer lending increased by 17 percent.

“We are happy to see that loan growth has remained resilient, although slightly below the first-quarter performance. We expect challenges going forward, especially on our net interest margin, with the recent cut in the BSP overnight borrowing rate,” said BPI senior executive vice president and chief operating officer Gil Buenaventura.

Of BPI’s total loan portfolio, the consumer segment accounted for 24 to 25 percent; SMEs, 15 percent, while the middle market had a 27-percent share. The remaining 33 percent represented the share of top-tier corporate borrowers.

Asked whether BPI would likely meet the full-year consensus forecast of about P15 billion, Buenaventura said it would depend greatly on the operating environment, which had remained challenging. He said the first quarter was an “aberration” that resulted in favorable trading gains.

The significant growth in profits in the first semester was mainly driven by the 24-percent improvement in revenues. Six-month net interest income rose by 9 percent while noninterest income surged by 51 percent.

The improvement in net interest income was attributed to the combined effect of a P32-billion increase in average asset base and a 14-basis-point improvement in net spreads. Noninterest income was boosted by the extraordinary level of trading gains realized in the first quarter of the year as the bank sold down its securities inventory.

On the expenditure side, the growth in operating expense slowed to 9 percent.

The bank’s asset quality continued to improve with a net 30-day nonperforming loan ratio of 1.4 percent from 1.8 percent a year ago.

Total funds intermediated reached P1.46 trillion as the bank’s total deposits grew by 6 percent to P734 billion as of end-June.

About 65 percent of BPI’s deposit base represented low-cost current account/savings account deposits.

Assets under management amounted to P730 billion, up by 15 percent from last year.

BPI’s market capitalization was P265 billion as of the end of June. Its capital adequacy ratio stood at 14.5 percent of risk assets based on Basel 2 framework.

Originally posted at 01:47 pm | Wednesday, August 01, 2012