BPI 6-mo profit hits P11.7B

Ayala-led Bank of the Philippine Islands (BPI) booked P11.7 billion in net profit in the first semester, down by 7.7 percent year-on-year in the absence of one-time treasury gains that boosted comparative income last year.

Excluding one-off income from the sale of held-to-maturity securities that increased comparative earnings last year, net income for the first semester went up by 48 percent, the bank said in a regulatory filing yesterday.

Total revenue was flat at P35.3 billion. Net interest income rose by 13.6 percent year-on-year to P23.5 billion supported by a wider average net interest margin and greater lending activities relative to deposits generated.

Non-interest income fell by 18.4 percent year-on-year to P11.8 billion due to the decline in securities trading gains.

In June 2016, BPI sold a portion of held-to-maturity securities to fund loan growth, reduce high cost deposits and enhance capital. The absence of such one-off trading gains this year was partially offset by higher fee-based income, which grew at a robust pace of 17.8 percent year-on-year, driven by cards and payments, service charges and investment banking businesses.

Operating expenses ended at P18.3 billion, higher by 5.4 percent due to higher spending on technology and some increase in regulatory costs.

The bank set aside P2.5 billion in provisions for soured loans for the semester, in line with its budget.

“BPI anticipates continued discipline in managing operating expenses for the remainder of the year,” the disclosure said.

The bank spent 51.6 centavos to earn every peso in the first semester, higher than 49.2 centavos spent last year.

The first semester performance translated to a return-on-equity of 13.7 percent and return-on-assets of 1.4 percent, lower by 2.66 and 0.28 percentage points, respectively.

BPI grew its loan book in the first semester by 16.9 percent year-on-year to P1.1 trillion, driven largely by corporate loans which grew by 19.5 percent.

On asset quality, non-performing loans eased as a ratio of total loans to 1.5 percent from 1.6 percent a year ago. Reserve cover, on the other hand, rose to 126.1 percent of bad loans compared to 117.8 percent a year ago.

On the funding side, BPI expanded its deposit base by 8 percent year-on-year to P1.4 trillion, 73 percent of which consisted of low-cost deposits. For every peso accepted as deposits, BPI lent out 74 centavos, thus creating earning assets.

BPI’s securities holdings as of June stood at P289 billion, up 7.3 percent versus the same period last year. Of these, held-to-maturity securities accounted for the lion’s share of P260.2 billion, a segment thus seen as less exposed to interest rate risk.

The bank expanded its balance sheet in the first semester by 8.3 percent year-on-year to P1.7 trillion. Total capital also increased by 7.9 percent to P173.5 billion.

Capital adequacy ratio to risk assets stood at 13.7 percent while core or tier 1 capital ratio was at 12.8 percent.