BPI’s Q1 net profit down 5% on higher loan loss buffer

BPI prexy Cezar Consing

Higher provisioning for probable credit losses amid the COVID-19 pandemic trimmed Bank of the Philippine Islands (BPI)’s first quarter net profit by 5 percent year-on-year to P6.39 billion.

In a disclosure to the Philippine Stock Exchange on Thursday, BPI said it had booked P4.23 billion in provisions for loan losses in the first quarter as the COVID-19 pandemic ushered in a difficult period for consumers and businesses that could lead to potentially higher loan defaults.

The provisioning expense was 2.4 times more than the P1.8 billion buffer set aside during the same period in 2019.

For the first quarter, BPI’s total revenues increased by 10.9 percent to P25.26 billion. Net interest income grew by 13 percent to reach P18.14 billion.

Net interest margin was 3.63 percent, up by 24 basis points from the year-ago level as lower asset yields were offset by lower cost of funds.

Non-interest Income was P7.12 billion, up by 5.8 percent year-on-year, primarily from higher securities trading gains.

Operating expenses for the first quarter 2020 amounted to P12.53 billion, up by 3.8 percent from the previous year. The bank spent 49.6 centavos to earn every peso during the quarter, more efficient than the 53 centavos spent to earn every peso in the same quarter last year.

Total loans rose by 7.3 percent year-on-year to P1.45 trillion as of end-March, driven by the growth of microfinance, small and medium enterprise (SME), consumer, and corporate loan books at 66.6 percent, 14.2 percent, 9.5 percent, and 6.7 percent, respectively.

Total deposits increased by 4.3 percent to P1.68 trillion. About 73.5 percent of total deposits were low-cost funds.

For every P1 of deposits generated by BPI, the bank turned 86.3 centavos into earning assets through lending activities.

BPI’s first quarter performance translated to a return on equity of 9.38 percent, and a return on assets of 1.21 percent.