The country’s biggest lender Banco de Oro Unibank posted a net profit of P11.05 billion in the first semester, declining by 22 percent year-on-year but attaining close to half of its full-year goal.
In a disclosure to the Philippine Stock Exchange, the banking arm of the SM group of companies said the six-month net profit fell compared to last year due to extraordinary gains booked in the first half of 2013. However, BDO also noted that this represented a 19-percent year-on-year growth on a core operating basis.
BDO has set a full-year net profit guidance of P22.8 billion, a new high for the bank despite a more challenging treasury business this year.
Building its durable earnings stream, BDO’s net interest income grew by 24 percent year-on-year to hit P24.7 billion, on the back of a 21-percent growth in customer loans. BDO’s gross customer loans were estimated at P975.1 billion.
On the other hand, total deposits ended the semester at P1.37 trillion, equivalent to a 35 percent year-on-year growth rate.
With 17 new branches as of the second quarter, BDO said continued branch expansion enabled it to sustain growth in low-cost current account and savings account (Casa) deposits and effectively reduced its cost of funds.
Trading and foreign gains reached P4.2 billion for the first half of this year, less than half of the P8.8-billion windfall in the same period last year. Fee-based income, however, expanded to P8.3 billion compared to last year’s P6.38 billion.
Operating expenses increased to P24.2 billion compared to P21 billion in the same period last year.
BDO said its pre-provision operating profit remained solid as it recorded a first-half figure of P14.7 billion.
On asset quality, BDO said non-performing ratio to total loans stood at 1.6 percent given a benign credit environment while the current coverage ratio stood at 174 percent.
Total capital adequacy ratio (CAR) stood at 14.5 percent of risk assets. Counting only common equity tier 1 CAR, the ratio stood at 13.1 percent under the more stringent Basel 3 framework. These ratios were well above the regulatory minimum of 10 percent and 8.5 percent, respectively.
Basel 3 framework, which was implemented in the country at the beginning of this year, introduced a complex package of reforms designed to improve the ability of banks to absorb losses. This also extended the coverage of financial risks and required a stronger firewall against periods of stress.
“As the Philippine economy copes with changes in the political, global and environmental landscapes, BDO continues to build on its primary business strengths in order to capitalize on new opportunities and further solidify its market leadership,” the bank said.