BPI posts strong Q1 results

BPI top brass briefing the press after the bank’s 2017 annual stockholders meeting

Ayala-led Bank of the Philippine Islands (BPI) grew its first quarter net profit by 25.6 percent year-on-year to P6.25 billion on higher earnings from lending, fee-based and treasury businesses.

This performance brought the bank’s return on equity (ROE) to 15 percent, up by 1.89 percentage points from the previous year, BPI disclosed to the Philippine Stock Exchange on Thursday.

“What this shows is that the momentum we got to see last year in 2016 is carried over to this year,” BPI president Cezar Consing said in a press briefing after the bank’s stockholders meeting.

Total revenues in the first three months went up by 17.6 percent year-on-year in the first three months to P17.96 billion. Net interest income increased by 15 percent to P11.49 billion as asset yields rose along with loan volumes.

BPI grew its loan book by 19.9 percent year-on-year to P1.03 trillion in the first three months while keeping credit quality in check. The ratio of bad loans to the total loan portfolio eased to 1.5 percent in the first quarter from 1.7 percent in the previous year.

Consing said it’s too early to say whether the strong growth in loan book seen in the first quarter could be sustained for the rest of the year. However, he said the bank’s ROE was “moving in the right direction.”

“While we are pleased with our first quarter financial and operating results, we are very excited about our programs to continually enhance customer service across multiple channels, by increasing safety, innovation, and convenience,” Consing said.

During the press briefing, BPI chief finance officer Maria Theresa Marcial-Javier explained that the growth in net interest earnings was driven by a robust corporate loan book.

“The other main driver of net income is the strong non-interest income growth for the first quarter, driven mainly by trading gains from sale of securities as well as asset sales. In addition to that, for the first quarter of this year versus last year, we saw an increase in our net revenue from bonds growing by 4-basis points. At the same time, we saw our cost of deposits going down also for the first quarter compared to the same period last year,” Javier said.

The bank’s three-month non-interest income expanded by 22.6 percent to P6.46 billion on higher trading gains, service charges, underwriting fees and income from asset sales.

BPI executive vice president and head of global markets Antonio Paner said part of the bank’s first quarter strategy was to continue efforts to focus on recurring income than trading income.

“What we did late last year was to reorganize our distribution organization so that instead of dividing it on a per product (basis), we are dividing it on a per client basis. So we have a team focusing on corporate accounts, a team focusing on retail. We think we have a lot of things that we can do on the retail space because most of our retail clients are untapped as far as cross-selling of securities and foreign exchange are concerned. And we’re happy to note that in the first quarter, our flows business revenues have increased by at least 15 percent on the retail (side), about 25 percent on corporate and on the securities side, it was even higher by 30 percent,” Paner said.

As a measure of efficiency, BPI spent 48.6 centavos to earn every P1, improving from the 51.4 centavos spent in the same quarter last year.

On the funding side, deposits ended at P1.44 trillion, up 10.7 percent year-on-year, with low-cost deposits accounting for 73.9 percent of total.

BPI’s operating expenses rose by 11.2 percent to P8.73 billion in the first quarter, driven mainly by additional manpower, regulatory costs, and spending on operational infrastructure. The bank continues to invest in processes and information systems that enhance customer experience and security.

Total assets expanded by 12.4 percent year-on-year to P1.73 trillion at end-March while capital ended at P171.85 billion, up by 10.2 percent. BPI officials said the existing capital would be sufficient to fund expansion plans in the years ahead.