BDO earnings at record high

The country’s largest bank BDO Unibank Inc. grew its net profit last year by 36 percent to a record-high P14.3 billion, outperforming its profit guidance on the back of higher interest earnings and hefty trading gains.

BDO, the banking arm of the family of tycoon Henry Sy Sr., disclosed to the Philippine Stock Exchange on Tuesday that the bank was able to exceed the P12.5 billion earnings guidance for 2012 as both interest and non-interest income expanded.  This translated to a return on common equity of 11.5 percent for the year.

“Driving the bank’s solid performance last year was the robust expansion in its lending, deposit-taking, and fee-based businesses,” BDO said in the disclosure.

Net interest income went up by 7 percent to P36.2 billion. Volume growth was offset by the impact of regulatory changes and excess system liquidity, the bank said.

Local interest rates last year fell to record lows following the 100-basis point reduction in the key policy rates of the Bangko Sentral ng Pilipinas, which boosted treasury earnings of most Philippine banks but exerted downward pressure on interest margins. The BSP also overhauled the reserve requirement framework to exclude bank earnings from reserves kept with the central bank.

For 2012, BDO’s customer loan portfolio grew by 15 percent to P769 billion, while low-cost deposits—made up of current and savings accounts—supported the increase in total deposits to P931.6 billion. The deposit base marked an increase of 8.5 percent from the P858.57 billion level at end-2011.

Total non-interest income rose by 18 percent to P24.6 billion, boosted by trading gains from treasury activities amounting to P8.2 billion. “The bank was able to capitalize on market opportunities and realize exceptional gains from its investment portfolio,” the bank disclosed.

The bank earmarked P4.9 billion in provisions against probable loan losses for the year. In terms of asset quality, gross non-performing loan (NPL) ratio stood at 2.8 percent, while provisions now cover 126 percent of NPL as of end-2012.

Capital base stood at P157 billion, the largest in the industry, while capital adequacy ratio (CAR) to risk assets and tier 1 CAR were at 19.1 percent and 15.2 percent, respectively, which were much higher than the minimum regulatory requirements.

“With the Philippine economy expected to sustain its growth momentum, BDO looks forward to tapping the promising growth opportunities in its customer segments, capitalizing on its established business franchise and wide distribution network,” the bank said.

BDO is the country’s largest bank in terms of assets, loans, deposits, capital and trust funds.  Total resources exceed P1 trillion. It has one of the largest distribution networks among Philippine banks, with more than 760 operating branches and over 1,900 ATMs nationwide. It has a branch in Hong Kong as well as 15 overseas remittance and representative offices in Asia, Europe, North America and the Middle East.