Ayala-led Bank of the Philippine Islands (BPI) grew net profit last year by 24.8 percent to P28.8 billion on higher margins and lending activities as well as improved treasury gains.
Net income for the fourth quarter of 2019 was P6.77 billion, higher by 11.6 percent compared to the same period in 2018, Southeast Asia’s oldest bank disclosed to the Philippine Stock Exchange on Wednesday.
The full-year performance translated to a return on equity of 10.97 percent for 2019, while return on assets stood at 1.38 percent.
Net interest margin increased by 24 basis points to 3.35 percent in 2019. At the same time, the bank grew its loan book by 8.9 percent to P1.48 trillion, driven by consumer loans which grew by 13.4 percent, while corporate and small and medium enterprise loans expanded by 7.9 percent and 5.8 percent, respectively.
Non-interest income amounted to P28.39 billion, an increase of 25.2 percent from the previous year, primarily from higher fee-based income and securities trading gains.
Last year, the Bangko Sentral ng Pilipinas slashed its key interest rates by a total of 75 basis points and slashed the reserve requirement by a total of 400 basis points, giving banks an opportunity to generate better treasury gains and reduce intermediation costs.
On the funding side, BPI’s total deposits rose by 6.9 percent to P1.7 trillion, 69.1 percent of which consisted of low-cost deposits. For every P1 of deposit generated, the bank turned 87 centavos into earning assets through lending.
Total assets stood at P2.21 trillion at year-end, higher by 5.7 percent from the previous year. On asset quality, the ratio of bad loans to total loans declined to 1.66 percent from 1.85 percent in the previous year.
Total equity amounted to P269.58 billion, with an indicative common equity tier 1 ratio of 15.17 percent and capital adequacy ratio of 16.07 percent, both well above regulatory requirements.
Operating expenses last year summed up to P50.08 billion, higher by 14.8 percent from the previous year. The bank spent 53.1 centavos to earn a peso in 2019, more efficient than the 55.5 centavos spent for every peso in the previous year.
Meanwhile, BPI announced its wholly owned microfinance bank BPI Direct BanKo (BanKo) has expanded its network to 300 branches, with 100 branches opened in 2019 alone. More than 50 percent of BanKo’s branches and branch-lite units are located in town centers in north and south Luzon, while the rest are distributed throughout various municipalities in the Visayas and Mindanao.
BanKo has doubled its loan portfolio every year since its creation in 2016. From only 2,500 clients when it started, BanKo has since served over 103,000 self-employed micro-entrepreneurs, providing business loans and financial advice.