BDO sees growth in 2022 despite near-term risks

BDO Unibank Inc., the country’s biggest lender, is poised to exceed prepandemic earnings in 2022 despite risks from high inflation, geopolitical tensions and the upcoming elections.

“We remain positive the worst of the pandemic is behind us,” BDO president Nestor Tan told stockholders during the company’s annual meeting.

The recovering economy would help drive an 8-12 percent growth in core loan operations, Tan said. Income from fees would also move higher while bad loans were normalizing.

He said BDO was thus targeting a 2022 year-on-year profit growth of 5-10 percent to nearly P45 billion to P47 billion—above the P44.2 billion it recorded in 2019.

But the lender warned that risks remained and near-term prospects were “mixed” due to higher commodity prices and further disruptions caused by the Russian invasion of Ukraine.

Tan said businesses were also wary of the upcoming presidential polls on May 9.

Fight against cybercrimes

“The elections will clearly bring different expectations and policies. Businesses have taken a pause before investing,” he said.

Ahead of the elections, Tan said BDO was prepared to work with the new administration in fighting and “discouraging” cybercrimes.

It would also support consumer protection rules aimed at the “proliferation of financial providers” that operate outside banking regulations.

Lastly, Tan urged the next administration to revisit the Philippine banking industry’s competitiveness relative to peers in Southeast Asia.

“One of the things we may want to look at is—are we able to compete regionally?” Tan said on Friday.

During the meeting, BDO stockholders approved an earlier announced plan to declare stock dividends worth 20 percent of its capital. Shareholders also approved the expansion of its capital by over 50 percent to 8.5 billion shares to support future growth.

Meanwhile, the lender’s current growth momentum was captured in its first quarter results.

Net income rose 13%

BDO disclosed to the Philippine Stock Exchange that net income from January to March this year rose 13 percent to P11.7 billion.

An increase in its loan portfolio and deposits pushed up net interest income by 6 percent to P33.9 billion.

BDO’s loans rose 7 percent to P2.4 trillion while deposits hit P2.8 trillion, driven by an 11-percent growth in current account and savings account deposits.

Bad debts were down, with its nonperforming loan (NPL) ratio dropping to 2.72 percent in the first quarter from 2.81 percent last year, BDO said.

BDO maintained its “conservative credit and provisioning policy” during the period, with provisions at P3.7 billion from P2.9 billion last year. This also resulted in a higher NPL coverage at 120.8 percent.