Ayala-led Bank of the Philippine Islands posted a 5.7-percent drop in first semester net profit to P11.03 billion due to the decline in its treasury, trust and investment management businesses.
Six-month net interest income expanded by 11.5 percent year-on-year to P26.21 billion given an increase in the loan book and an improvement in net interest margin (NIM).
In a statement, BPI reported that average asset base grew by 9.3 percent while NIM improved by 8 basis points.
Interest income from loans grew by 21.1 percent year-on-year, driven by a 16-basis point improvement in loan yields. However, cost of funds increased by 17 basis points for the period partly due to higher documentary stamp tax (DST) on deposits.
On a quarter-on-quarter basis, NIM expanded by 15 basis points as a result of favorable loan repricing and liquidity provided by the proceeds from the bank’s recent stock rights offering.
The recent capital build-up allowed the bank to retire more expensive time deposits. NIM increased from 2.91 percent in the first quarter to 3.06 percent in the second quarter.
BPI grew its loan book by 15.7 percent year-on-year to P1.22 trillion, driven primarily by the strong growth in corporate loans and credit cards at 17.1 percent and 22.7 percent, respectively.
On the funding side, total deposits reached P1.53 trillion, up by 7.2 percent, with low-cost current and savings accounts (CASA) registering faster growth at 10 percent. The bank’s Casa ratio stood at 75.3 percent.
For every P1 of deposit generated by the bank, it lent out 79.7 centavos.
Meanwhile, lower income from securities trading, trust and investment management and assets sales contributed to a 6.9-percent year-on-year decline in total non-interest income to P11.01 billion in the first semester 2018. This was partly offset by registered higher revenues from credit card fees and rental income.
Provision for loan losses for the first semester amounted to P1.91 billion, 22.2 percent year-on-year. The lower provisioning level is based on the bank’s expected credit loss models under local accounting standards, which showed “relatively benign increases in potential impairment losses.”
On asset quality, nonperforming loans as a ratio of total loans increased slightly from 1.72 percent last March to 1.8 percent with a reserve cover ratio of 97.1 percent.