BPI targets P20-B ’14 profit

Ayala-led Bank of the Philippine Islands expects net profit this year to climb to a new record high of P20.21 billion, about a tenth higher than the expected bottom line of P18.4 billion for 2013.

Based on the bank’s projections, which were submitted to the local stock exchange in line with its upcoming stock rights offering, the increase in profits this 2014 would likely be supported by a 22-percent expansion in loan book and an 18-percent build-up in deposit base.

BPI, the country’s most valuable bank, expects net proceeds of P24.61 billion from the sale of new shares to existing stockholders.

In the first nine months of last year, BPI reported an unaudited net profit of P15.8 billion, up by 19 percent year-on-year.  The full-year net profit outlook of P18.4 billion for 2013 will mark a 13-percent rise from the level posted the previous year.

This will translate to a return on average equity of 17.7 percent and return on average assets of 1.85 percent.

Return on average equity this year is expected to moderate to 15 percent and return on assets at 1.75 percent.

For 2014, BPI expects to grow its net interest income to P35.22 billion from P30.57 billion last year, for a 15.2 percent year-on-year increase.

Interest margin on earning assets is seen to average at 3.4 percent, firming up from last year’s 3.38 percent.

Banks usually increase interest margins by increasing the share of high-margin sectors like middle market and consumers to its loan portfolio, while boosting the share of low-cost funds.

While banks are bracing for a reduction in extraordinary trading gains this year, BPI expects non-interest income to increase by 8 percent with lower securities trading gains.

This is higher than the 5-percent rise in non-interest income expected by the bank for 2013.

For 2014, BPI expects total revenues to grow by 12 percent, faster than the 9 percent pace projected for the whole of 2013.

On the expenditure side, BPI sees operating expense and loss provisions this year to  grow by 14 percent, citing a likely increase in headcount and investment in infrastructure/technology as well as higher loan portfolio.