MANILA, Philippines —The Sy family’s BDO Unibank Inc. shattered records last year after posting a net income of P73.4 billion, the highest ever in Philippine corporate history.
Profits at the country’s biggest lender soared 28 percent over the previous year, driven by surging net interest earnings, which reached P186.4 billion, up nearly 25 percent. Total loans for the year expanded by 9 percent to P2.85 trillion.
COL Financial Group chief equity strategist April Lynn Tan said BDO’s net income in 2023 was the largest ever posted by a domestic corporation, even compared to large property firms and conglomerates.
She said BDO also exceeded their forecast due to higher revenues at the banking giant, which is part of the Sy family conglomerate SM Investments Corp.
The high earnings base might be challenging to sustain in 2024, however, as interest rates peak and amid a potential global recession, Tan said.
“We are bracing for a possible contagion. If that happens, banks never outperform because they are very sensitive to crisis,” she told the Inquirer on Monday.
Higher return
BDO’s robust performance last year translated to a return on common equity of 15.2 percent, up from 13 percent the previous year.
Its total non-interest income reached P84 billion, higher by 17.5 percent from the past year.
BDO also underscored improving asset quality as the nonperforming loans (NPL) ratio declined to 1.85 percent. Because of elevated interest rates and the risk of default, it raised the NPL coverage to 185 percent from 167 percent in 2022.
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Tan explained NPLs could tick higher in a scenario where the Philippine economy slows.
“This year, the margins might no longer grow. But the flip side is loan demand should accelerate with the expected decline in interest rates,” she added.
Total deposits
BDO ended the year with total deposits of P3.57 trillion, an increase of 11 percent, with 72 percent parked in low-cost current and savings account deposits.
Its common equity strengthened to P509.7 billion. The capital adequacy ratio stood at 14.9 percent while common equity tier 1 ratio finished at 13.8 percent, above minimum regulatory levels.
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“BDO’s strong business franchise and market leadership, healthy capital position, and robust financial performance bolster the bank’s foundation for long-term sustainable growth and profitability, despite continuing challenges in the macroeconomic environment,” the bank said on Monday. INQ