DBP net income down 39% to P1.74 billion in H1

MANILA, Philippines—The state-owned Development Bank of the Philippines posted a decline in net income in the first half, but said the profit during the period still kept the bank on track to meeting its target for the full year.

In a statement, DBP said its net income stood at P1.74 billion from January to June, marking a 39-percent drop from the P2.83 billion in the same period in 2010.

Earlier, the bank said this year’s income would likely drop given that some of the income-generating transactions that the bank engaged in last year were one-time, non-recurring deals.

Although the net income dropped, the bank’s total assets managed to grow. Assets by the end of June reached P306.33 billion, up from P283.43 billion as of the same period last year.

The government-run bank has set its income target for this year at P3.7 billion, compared with the 2010 full-year income of P4.6 billion. The bank expressed confidence that it could attain this year’s profit goal.

This is despite controversies hounding the bank, which is faced with allegations that it engaged in questionable loan transactions during the time of President Gloria Macapagal-Arroyo.

Amid investigations, one of the bank’s lawyers, Benjamin Pinpin, committed suicide earlier this month. The investigations are headed by Finance Secretary Cesar Purisima.

DBP President Francisco del Rosario said in the statement that the bank would be able to hit its income target for this year, due to various income-generating opportunities, such as rising demand for credit.

Del Rosario said “the bank will be able to exceed its net income target for the year.”

“While the bank has been the subject of various news reports concerning the untimely demise of a DBP junior officer and certain loans transactions granted in 2009, DBP remains on track in its financial targets and development goals,” Del Rosario said.

DBP has been lending more, noting that expansion of credit activities is one of its key sources of income.

As of the end of June, outstanding loan portfolio of the bank amounted to P169.31 billion, higher than the P142.16 billion registered in the same period last year.

The bank said it remained committed to its mandate of pursuing the government’s developmental goals, noting that 90 percent of its loan portfolio was used to help fund projects related to infrastructure development, social services, environment protection, and promotion of micro, small, and medium enterprises (MSMEs).

The increase in loans was supported by the rise in deposits. Outstanding deposits amounted to P131.01 billion, up from P119.27 billion over the same period.

DBP reported being adequately capitalized, with its capital adequacy ratio hitting 19.37 percent by the end of the first half, better than the 10-percent minimum requirement by the Bangko Sentral ng Pilipinas and the 8-percent international benchmark.