BDO hits 2014 net profit goal of P22.8B

THE COUNTRY’S leading bank Banco de Oro Unibank hit its P22.8 billion net profit goal for 2014, achieving a new record level despite a period marked by volatile global financial markets.

BDO’s net profit last year slightly exceeded 2013’s net profit of P22.6 billion, likewise then a record profit level. This performance was attributed by the bank to the strong expansion of its core businesses.

In a report to the Philippine Stock Exchange on Thursday, BDO reported that recurring earnings – excluding the impact of one-off gains booked in 2013 – had expanded by 18 percent last year.

The rise in the bank’s customer loan portfolio outpaced the industry by posting a 20 percent growth and hitting P1.1 trillion. On the funding side, total deposits grew by 11 percent to P1.5 trillion, driven primarily by a 24 percent increase in the low-cost deposit base.

Net interest income grew by 19 percent to P51.2 billion while fee-based service income contributed P18 billion, up by 16 percent year-on-year. The bank said these core revenue streams had compensated for the decline in trading and foreign exchange gains. As such, gross operating income increased by 8 percent to P80.7 billion.

In the first semester of 2014, most banks saw a sharp contraction in treasury earnings but there was some rebound in the second semester.

On the expenditure side, the bank kept its operating expense growth at 12 percent despite the sustained business and branch expansion.

BDO set aside P5.1 billion in provisions for the year, even as asset quality continued to improve, with gross non-performing loan (NPL) ratio falling further to 1.3 percent from 1.6 percent in 2013. In line with prudent provisioning policies, the bank increased its NPL cover to 188 percent in 2014 from 173 percent in 2013.

The bank’s capital base stood at P180 billion at end 2014, with both the capital adequacy ratio (CAR) and common equity tier 1 ratio reaching 14.6 percent and 12.4 percent, respectively, well above minimum regulatory requirements under Basel 3 framework.

Basel 3 has introduced a complex package of reforms designed to improve the ability of banks to absorb losses. It also extended the coverage of financial risks and put in place stronger firewalls against periods of stress.