Ayala-led Bank of the Philippine Islands (BPI) grew its second quarter net profit by 28.8 percent year-on-year to P6.8 billion, the highest quarterly earnings seen by the bank this pandemic, as provisions for loan losses declined.
This improved six-month net profit by 1.2 percent year-on-year to P11.8 billion despite the slowdown in revenues, Southeast Asia’s oldest bank disclosed to the Philippine Stock Exchange on Thursday.
The 28.8-percent second quarter profit growth, which had come from a low base in the same period in 2020 when the pandemic-induced lockdowns started, reversed the 21.7-percent year-on-year profit decline the bank saw in the first quarter of this year. Sequentially, earnings grew by 36.3 percent over the first quarter.
BPI set aside P2.9 billion in second quarter provisions for probable credit losses, lower than the P3.6-billion buffer put up in the first quarter and the P10.54-billion provisions made in the second quarter of last year.
P6.5B total provisions
The bank’s six-month provisions totaled P6.5 billion, 55.7-percent lower than the P14.7 billion booked over the same period last year.
“We see encouraging signs of improvement in asset quality metrics such as significantly lower ECL (expected credit loss) and a modest decline in NPL (nonperforming loan) level in June alone,” BPI chief financial officer Maria Theresa Marcial said in a text message.
The bank’s bad loan ratio as of the first semester stood at 2.94 percent of total loans. For every peso of NPLs, it had set aside P1.20 in loss provisions.
Meanwhile, six-month revenues declined by 6.7 percent year-on-year to P48.1 billion due to the decline in interest earnings and trading gains. The fee-based business, however, grew by 37.2 percent year-on-year.
Net interest income fell by 6.6 percent year-on-year to P33.9 billion in the first semester as net interest margin contracted by 24 basis points to 3.32 percent, while yields from earning assets fell by 85 basis points.
BPI’s loan base also fell by 4.5 percent year-on-year to P1.4 trillion.