BDO 2019 profit exceeds target

The country’s largest lender, BDO Unibank Inc., posted a record high net profit of P44.2 billion last year, beating its full-year target and posting the largest bottom line among its local peers.

The results exceeded BDO’s P38.5-billion profit guidance and translated to a return on common equity of 12.8 percent, improving from 10.7 percent in the previous year.

BDO’s 2019 net profit increased by 35 percent from the previous year on the back of robust core businesses alongside large treasury gains, BDO disclosed to the Philippine Stock Exchange.

The banking arm of the SM group topped the 2019 net pro­fit booked by Metropolitan Bank and Trust Co. and Bank of the Philippine Islands amounting to P28.1 billion and P28.8 billion, respectively.

BDO’s net interest income expanded by 22 percent to P119.9 billion as the bank unlocked higher margins from an enlarged loan book. Net interest margin improved as the bank grew its low-cost deposits while skewing its loan mix in favor of consumer and middle market customers, a segment where margins are better.

The bank grew its loan book by 9 percent to P2.2 trillion on broad-based growth across market segments.

On the funding side, total deposits rose by 3 percent to P2.5 trillion, driven by the 8-percent increase in low-cost deposits that comprised 73 percent of total deposits.

Noninterest income reached P60.6 billion, up by 22 percent from the previous year. Fee-based income contributed P35.3 billion, up by 15 percent. Insu­rance premiums accounted for P14.8 billion.

Trading and foreign exchange gains settled at P5.7 billion. In the previous year, BDO recorded a trading loss of P1.6 billion mainly from unrealized losses on BDO Life’s portfolio.

Operating expenses amounted to P115.2 billion, up by 17.5 percent from year-ago level, which BDO attributed to its continuing business and network expansion, alongside high­er volume-­related expenses, specifically, taxes and licenses and policy reserves at BDO Life.

Maintaining what it deems a conservative credit and provisioning policy, BDO set aside P6.2 billion in loan loss buffer, even as gross nonperforming loans were steady at 1.2 percent as a ratio of total loans. For every P1 of bad loan, the bank has set aside P1.65 centavos as cover. —Doris Dumlao-Abadilla