MANILA, Philippines—Banco de Oro Unibank, the country’s largest bank, grew its net profit last year by 19 percent to P10.5 billion, a record high for the bank, as double-digit growth in fee-based earnings and trading gains complemented steady net interest earnings.
Last year’s record performance was in line with the bank’s earnings guidance and translated to a return on equity of 11.7 percent, BDO reported to the Philippine Stock Exchange on Tuesday.
The banking arm of tycoon Henry Sy grew its loan book by 24 percent last year to P670.1 billion, outpacing the industry growth of 19 percent. BDO said it focused its lending on “creditworthy borrowers in fast-growing industry sectors.”
BDO said its net interest income was “flat” compared to last year, which the bank attributed to the “continued downtrend in asset yields arising from excess system liquidity.” The level of net interest income for 2011 was not disclosed but last year’s reported level amounted to P34.2 billion.
Recurring fee-based income from its service businesses rose by 18 percent to P12.3 billion while trading and foreign exchange gains went up by 10 percent to P6.5 billion amid a volatile external environment. Along with other miscellaneous income, BDO recorded a 17-percent growth in non-interest income to P20.9 billion.
While BDO grew its earning assets faster than the rest of its peers, it kept asset quality in check. Gross non-performing loans (NPLs) as a ratio of total loans further eased to 3.4 percent last year from 4.7 percent in 2010 while NPL coverage improved to 106 percent from 92 percent. The bank said it had set aside loan loss provisions “conservatively,” with P6.1 billion in buffer earmarked for the year.
Pre-provision operating profit grew by 7 percent to P18.4 billion.
On the funding side, the bank reported an improved funding mix, noting that a robust growth in low-cost deposits had led to a 10-percent increase in total deposits to P858.6 billion.
“Having completed its investments in capacity, BDO is now starting to benefit from scale with operating expenses increasing only moderately by 4 percent to P36.3 billion,” the bank said.
Capital adequacy ratio (CAR) to risk assets improved to 15.8 percent from 13.8 percent in 2010. This was higher than the minimum CAR of 10 percent required by the Bangko Sentral ng Pilipinas.
“Looking forward, the bank will continue to take advantage of promising growth opportunities across industry and geographic segments while positioning defensively against potential external or industry threats,” the BDO disclosure said.