BDO profit rose 12% in Q1

Profit of industry leader BDO Unibank rose by more than a tenth in the first quarter of the year as interest margins improved, the lender reported on Friday.

In a statement published after its annual shareholders’ meeting, the bank of the Sy family noted that the improvement in its margins came from both ends of the business as low-cost deposits rose and loans grew.

“The bank’s outstanding performance was attributed to increased earnings from its core businesses, mainly lending and deposit taking and fee-based services,” BDO said. “Despite its continued business expansion, operating expense growth was well managed, and asset quality continued to improve.”

In the first quarter of 2015, BDO’s profit rose by 12 percent to P6.1 billion, sustaining its growth momentum from last year. In 2014, BDO’s net income increased by 18 percent to a full-year record of P22.8 billion.

Net interest income continued to be the main earnings driver, rising to P13.3 billion.

The bank’s customer loans grew by 15 percent year-on-year to reach P1.1 trillion, while total deposits stood at P1.5 trillion, up by 12 percent. Growth was driven by low cost deposits, which grew by 17 percent from sustained marketing efforts and branch expansion.

Fee-based income from payments, transaction banking and asset management services also expanded to P4.3 billion, while treasury-related activities were off to a good start, contributing P3.4 billion to revenues.

Operating expense growth was contained at 12 percent, bringing pre-provisioning operating profit to P8.7 billion—up 19 percent year-on-year.

The bank set aside P1.2 billion in provisions for the quarter even as asset quality remained healthy, with nonperforming loan (NPL) ratio at 1.3 percent and NPL cover of 192 percent.

With a capital base of P181 billion, the bank’s common equity tier 1 ratio and capital adequacy ratio remained comfortably above the regulatory minimum at 11.9 percent and 14 percent, respectively.