BDO expects leaner full-year profit

PHOTO: Official website of BDO / bdo.com.ph

BDO Unibank Inc. opened 2025 with higher profits, although the Sy-led lender admitted it might not be able to repeat the strong growth it registered last year.

This, as the ongoing rate-cutting could squeeze its margins, while global uncertainties may dampen demand for loans.

Financial results showed BDO, the largest bank in the country in terms of total assets, netted P19.7 billion in the three months through end-March. This meant an increase of 7 percent year-on-year.

At a press conference, Nestor Tan, company president and CEO, said the first quarter is typically not the strongest season for BDO.

The bank usually front-loads expenses like business and income taxes during the first three months of every year.

BDO’s operating expenses increased by 16 percent to P40.9 billion during the period.

But Tan also said January-March earnings were “actually affected by uncertainty” amid the ongoing US trade war. This has created unprecedented uncertainty that’s prompting companies to rethink their expansion plans.

Strong Q1

“So, first quarter numbers, a mixture, but generally trending where we normally trend,” he added.

Data showed BDO’s total outstanding loans grew by 12 percent in the first quarter. This was a slower pace of growth than the 13.2 percent clip in 2024.

Corporate lending, accounting for half of the bank’s P3.3-trillion loan portfolio, grew less at 8.7 percent from 12.6 percent.

“As you can see, large corporate [loans], which are normally the ones that go into huge infrastructure projects and capital expenditures, are now down to high single digits. It was the driver before,” Tan said.

“Now, they are not abandoning investments, but with the tariff and with all of the actions happening with Trump 2.0, some of them have opted to defer,” he added.

Margin squeeze

Meanwhile, net interest income climbed by 6 percent to P47.8 billion. Noninterest income jumped by 21 percent to P18.6 billion, fueled by the strong performance of fee-based income.

Tan said the ongoing easing cycle of the Bangko Sentral ng Pilipinas (BSP) could weigh on BDO’s margins this year. This might prevent the company from beating its 2024 bottom-line growth of 12 percent.

BDO expects two more quarter-point rate cuts from the BSP for the remainder of the current easing cycle.

“It (2025 net income growth) will be a little less,” Tan said.

“And it’s because of the expected decline in interest rates. Spreads will be affected. It will still have growth, but probably not at the same level as last year,” he added.