MANILA, Philippines—Ayala-led Bank of the Philippine Islands chalked up a record-high net profit of P12.8 billion in 2011, up by 13.4 percent from the previous year, as loan margins improved while lending volume grew sharply despite the country’s slower economic growth.
In a disclosure to the Philippine Stock Exchange on Monday, BPI reported that this unaudited net income for 2011—which marked the bank’s 160th year in operation—translated to a return on equity of 15.2 percent and return on assets of 1.6 percent.
BPI president Aurelio R. Montinola III said: “2011 was both challenging and exciting. Despite eurozone troubles, below-2010 Philippine GDP growth, and low interest rates, BPI performed creditably. We grew loans 20 percent, assets under management (by) almost 40 percent, and significantly increased our loan to deposit ratio.”
Total revenues grew by 7 percent as net interest income improved by 10 percent due to the P48-billion expansion in average asset base. Amid a low interest-rate environment, net interest margin was not only preserved but ended higher by 13 basis points, the bank said.
The bank expanded its net loan book by 20 percent year on year to P453 billion supported by growth in all market segments: middle market by 24 percent, top-tier corporations by 21 percent, small and medium enterprises by 20 percent and consumer by 12 percent. For every P1 of deposit liability, the bank turned P0.68 into earning asset through lending, higher than the 54 centavos disbursed for every peso of deposits in 2010.
Montinola said BPI had also exceeded its goal to hit a five-million customer base in 2011.
BPI’s non-interest income also grew by 3 percent last year due to higher service charges, trust fees, income from the insurance companies and credit card income.
Operating expenses rose by 12 percent with almost half of the growth brought about by salary-related increases. Manpower cost, however, remained at 48 percent of total expenses. The bank also incurred higher premises costs, regulatory costs and other variable costs.
Impairment losses were lower at P2.15 billion in view of the continuous decline in non-performing assets. Asset quality continued to improve as the net 30-day non-performing loan ratio went down further to 1.9 percent from the prior year’s 2.1 percent, with a reserve cover of 116 percent.
Southeast Asia’s oldest bank ended 2011 with total resources of P843 billion, which BPI said was slightly lower than the balance sheet in the previous year due to “focus on the safety of the bank’s assets and the maintenance of yields at the expense of assets growth.”
On the liability side, the bank continued its thrust of growing low-cost deposits to fund its loan growth. Though total deposits contracted by about 5 percent to P681 billion, total intermediated funds reached P1.35 trillion, or a 12-percent increase as assets under management went up by 38 percent, the bank reported.
“We look forward to 2012 as a better year for the country and for BPI as we intend to continue our loan growth path and differentiate ourselves through superior relationship managers and ever-growing, easy-to-use online banking,” Montinola said.