BDO targets P28-B profit this year

The country’s largest lender BDO Unibank sees net profit this year rising by 7.3 percent to P28 billion, another record high, driven mostly by recurring earnings from lending and fee-based businesses.

In the first quarter, BDO achieved about a fifth of its full-year profit guidance. The bank chalked up a net profit of P5.8 billion in the first three months, up by 6 percent from the previous year.

In a press briefing on the sidelines of the bank’s stockholders meeting yesterday, BDO president Nestor Tan reported that net interest income in the first quarter had expanded by 19.2 percent year-on-year to P18.4 billion.

Non-interest income rose by 52.4 percent to P11.4 billion as the stronger growth in fee-based earnings made up for the slack in securities trading and foreign exchange gains.

Fee-based service income from payments and settlements, credit card acquiring fees and wealth management services increased by 42 percent to P6.8 billion while insurance premiums added P2.2 billion.

About 82-89 percent of BDO’s income is “sustainable,” Tan said, referring to durable earnings derived from interest income and fees.

He said BDO’s strategy would be to achieve a good balance of profit, growth, diversification and sustainability.

To achieve the bank’s full-year goal, Tan said BDO was assuming its loan book would expand by mid-teen level. However, he noted that first-quarter loan growth was already at 21 percent.

This year, Tan sees sustained expansion in loans and deposits, growth upside from infrastructure projects, steady rise in fee income, continued branch expansion in regional markets and increased investments in new initiatives.

BDO, which became the country’s largest bank through a series of acquisitions in the last two decades, remained open to acquisition opportunities. “I think organically, we will be where we want to be. If there’s an opportunity to acquire an entity, then we will look at it as an alternative to organic growth but we’re not looking at it as an end. We’re looking at it as a means,” Tan said.

In the first quarter, customer loans accelerated by 21 percent to P1.5 trillion, with all market segments posting robust expansion rates. Total deposits grew by 13 percent to P1.9 trillion, backed by the 17 percent jump in low-cost deposits.

The bank continued to set aside provisions amounting to P1.4 billion for the quarter even as asset quality remained healthy with the non-performing loan (NPL) ratio unchanged at 1.3 percent from the previous year. NPL stood at 138 percent.