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The country’s largest lender, BDO Unibank, saw a 78.6 percent year-on-year drop in first semester net profit as the bank jacked up loan loss provisions to brace for a possible surge in corporate delinquencies.
As the coronavirus pandemic continues to wreak havoc on the global economy, BDO set aside P22.4 billion worth of loan loss buffer in the first semester, of which P20 billion was made in the second quarter alone.
Without the loss provisions, operating income grew by 17 percent as core businesses held up well despite the COVID-19 pandemic, BDO disclosed to the Philippine Stock Exchange on Monday.
“By recognizing the provisions upfront, the bank can now focus on growing its business as restrictions under ECQ/GCQ (enhanced community quarantine/general community quarantine) are gradually relaxed,” BDO said in its disclosure.
BDO’s six-month net interest income went up by 17 percent, driven by the 11-percent expansion in loan book to P2.3 trillion.
On the funding side, deposits rose by 9 percent year-on-year to P2.6 trillion during the semester. His was driven by low-cost deposits which rose by 19 percent year-on-year and accounted for 77 percent of total.