BDO sees drop in net profit resulting from higher loan loss provision
MANILA, Philippines—The country’s largest lender, BDO Unibank, saw a 36.2 percent drop in net profit last year to P28.2 billion on larger provisions for probable loan losses set aside during the challenging macroeconomic environment caused by the COVID-19 pandemic.
BDO set side loan loss provisions of P30.2 billion for 2020, much larger than the P6.2 billion buffer booked in 2019. The bank said this was in line with “prudent credit and provisioning policies, meant to further strengthen its balance sheet.”
The bank’s net interest income grew by 12 percent to P133.7 billion, supported by a modest growth in the loan book.
Loans managed to grow by 3 percent to P2.3 trillion, driven by consumer and corporate accounts. BDO said it continued to assist its borrowing clients, ensuring uninterrupted access to credit facilities, in addition to granting loan moratoria under Bayanihan 1 and 2.
Low-cost deposits expanded by 17 percent to P2.1 trillion, as clients were able to access BDO products and services through its branches, automated teller machines (ATMs) and digital channels even during quarantine restrictions.
Non-interest income declined by 8 percent to P55.2 billion, supported by fee-based income, trading gains and insurance premiums.
Business volumes were initially disrupted by mobility restrictions, but have since begun to recover gradually, the bank said.
Wealth management, on the other hand, remained resilient with trust volumes and fees sustaining growth. Trading gains increased while insurance premiums grew modestly despite the initial impact of the lockdowns.
Operating expenses decreased by 2 percent to P112.6 billion due to a reduction in marketing and volume-related expenses.
On asset quality, non-performing loans stood at 2.65 percent of total loans. For every P1 of loans that turned sour, the bank has provided P1.09 in cover. As of yearend, total loan loss reserves were equivalent to 3 percent of gross customer loans, and are deemed to be “more than sufficient to cover for potential losses.”
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