MANILA, Philippines —The Ayala Group’s Bank of the Philippine Islands (BPI) logged its second straight year of record profits in 2023 as interest earnings surged due to higher rates.
BPI said in a stock exchange filing on Friday that net income last year hit P51.7 billion, up 30.5 percent, while revenues jumped 16.7 percent to P138.3 billion.
The country’s third-biggest lender said overall assets grew as total loans expanded by 10.5 percent to P1.9 trillion. This also pushed up net interest income by 22.7 percent to P104.4 billion while margins increased by 0.5 percentage points to 4.09 percent.
The bank’s non-interest income during the period grew 1.5 percent to P34 billion on record trading gains of P5.2 billion—up 37 percent over the same period last year.
The bank’s strong performance in 2023 contributed to a return on equity of 15.35 percent and return on assets of 1.93 percent, which are key metrics followed by investors.
Another banner year
BPI president and CEO Jose Teodoro “TG” Limcaoco, who steered the banking giant to historic high profits after taking over in the middle of 2021, said in a recent chance interview that BPI could post another banner year in 2024 after the takeover of Robinsons Bank and increased loans.
READ: BPI enters 2024 with bank takeover
COL Financial Group chief equity strategist April Lynn Tan told the Inquirer on Friday the banking industry outlook was positive for 2024 as an expected cut in interest rates will lead to “faster loan growth”.
Peaking interest rates might cap net interest margins, however, Tan said smaller banks will also benefit given their large percentage of more costly time deposit accounts.
Lastly, lower rates will also help banks reduce expenses since this would ease pressure on non-performing loans, Tan said.
READ: Rate cut prospects thrill PH investors
In 2023, BPI’s expenses for bad debts plunged by over 56 percent to P4 billion. Its non-performing loans ratio stood at 1.84 percent while NPL coverage was at 156.1 percent, the filing showed.
Its total asses during the period grew 10.9 percent to P2.9 trillion while total deposits climbed 9.5 percent to P2.3 trillion. BPI’s current and savings account deposits were at 62 percent while loans to deposits stood at 82 percent.