BPI nets P22.42B

Ayala-led Bank of the Philippine Islands (BPI) improved net profit last year by 1.7 percent to P22.42 billion, reversing the downturn seen earlier in the year, as higher earnings from core lending activities and a robust fourth quarter shored up full-year results.

For the fourth quarter alone, BPI’s net profit rose by 14.9 percent year-on-year to P5.37 billion, Southeast Asia’s oldest bank disclosed to the Philippine Stock Exchange on Monday. Profit growth picked up pace from the 14 percent increase in the third quarter.

BPI was among the few large cap stocks that bucked the downturn at the stock market on Monday after announcing its robust fourth quarter results. The bank’s share price rose by 1.5 percent while the Philippine Stock Exchange index tumbled by 2.21 percent.

Excluding one-off gains from the sale of securities in 2016, BPI’s net income rose by 31.3 percent. Comprehensive income grew by 3.1 percent to P22.41 billion.

“We come out of 2017 stronger than ever,” BPI president and chief executive officer Cezar Consing said in a press statement. “While the bank has grown significantly in the past several years, we intend to continue to invest in people, technology and branches to support and benefit from a surging Philippine economy. Inclusive, profitable growth will be our focus.”

BPI’s full-year results translated to a return on equity of 12.8 percent and return on assets of 1.3 percent.

Total revenues for the full year reached P71.02 billion, rising by 6.7 percent as net interest income climbed by 13.4 percent to P48.04 billion as a result of asset growth and improvement in net interest margin.

Like most of its banking peers, BPI’s non-interest income dipped by 4.9 percent to P22.98 billion in the absence of the one-off trading gains recorded in the previous year. Net of one-off gains from the sale of securities in 2016, non-interest income grew by 18.4 percent.

The absence of one-off gains was partially offset by higher fee-based income which climbed to P19.9 billion, rising by 15.6 percent last year, attributed to higher credit card fees, trust and investment management fees, insurance fees, bank commissions and service charges.

The bank spent 54.3 centavos to earn every peso, slightly up from the average cost of 52.5 centavos in the previous year as BPI intensified spending for digitalization initiatives.

Operating expenses for the year rose by 10.3 percent to P38.53 billion, as spending on technology, operations and marketing increased in order to sustain growth initiatives, and as asset growth was accompanied by an increase in regulatory costs.

Provisions for loan losses taken in 2017 amounted to P3.8 billion, 20.9 percent lower than 2016 in anticipation of the recognition of excess reserves under Philippine Financial Reporting Standards 9, a framework which prescribes new accounting standards for financial instruments and impairment.

The bank ended the year with a loan book of P1.2 trillion, up by 15.5 percent, driven primarily by
corporate loans.

On asset quality, bad loans declined as a ratio of total loans to 1.29 percent from 1.46 percent while reserve cover ratio increased to 129.2 percent from 118.7 percent.

On the funding side, deposits reached P1.56 trillion, up 9.1 percent, with low-cost deposits accounting for the lion’s share of 71.2 percent. For every P1 of deposit, the bank lent out 77 centavos.

On its securities portfolio, BPI’s securities position was stable at P306.12 billion, just slightly down by 0.41 percent from 2016. Over 90 percent of the securities portfolio was in held-to-maturity assets, and were thus seen less exposed to interest rate risk.

BPI expanded its balance sheet to P1.9 trillion in 2017, up 10.3 percent, while total capital rose by 9.4 percent to P180.69 billion, net of P7.09 billion in cash dividends paid.

Capital adequacy ratio stood at 12.74 percent of risk assets and common equity tier 1 (CET1) was at 11.84 percent of risk assets.