BDO forecasts P20-B profit this year; makes P10-B in 1st Q

MANILA, Philippines—Banco de Oro, the country’s largest bank, expects to breach the P20-billion net profit mark this year as hefty trading gains in the first quarter are seen complementing robust interest earnings.

BDO has set a record-high net profit guidance — a euphemism for forecast — of P20.4 billion for this year, 43 percent higher than the level last year and ahead of the market consensus of about P15.7 billion. Half of its full-year target has been achieved in the first quarter as net profit grew by 257 percent year-on-year to P10 billion in the first three months.

The first-quarter earnings were boosted by a 130-percent rise in non-interest income to P13.3 billion. In a press briefing ahead of the bank’s annual stockholders meeting on Friday, BDO president Nestor Tan explained that the bank had liquidated some assets in its trading portfolio.

Asked whether the profit-taking in some securities investments in the first quarter was due to expectations of interest rates bottoming out this year, Tan said, “We expect rates to more or less stabilize at this level.”

Net interest income grew by 14 percent year-on-year to P9.6 billion in the first quarter.

For the full year, Tan said, BDO’s net profit forecast of P20.4 billion would be equal to a return on equity of 13-14 percent. Net interest margins are seen flat at around 3.4 percent but volume growth is seen unlocking more interest earnings for the bank, Tan said.