BDO posts 18% profit jump in Q1

MANILA, Philippines—The country’s biggest lender Banco de Oro Unibank Inc. grew its net profit by close to a fifth in the first quarter, driven by an increase in fee-based services that made up for tepid growth in earnings from loans.

In a statement, mall magnate Henry Sy’s banking arm said it ended the January-to-March period with a profit of P2.44 billion, up 18 percent from the same period last year. This was slower than the 32-percent growth that BDO posted in the same period last year.

The bank’s net interest revenues from loans rose by a modest 2 percent to P8.5 billion. This was driven by a 16-percent growth in consumer loans to P542.3 billion. Total deposits were up 10 percent, coming mainly from low-cost deposits generated from its extended branch network.

Non-interest income from fee-based services, however, posted a healthy gain of 25 percent to P5.4 billion. This came mainly from revenues from services such as trust, private banking and remittance.

Trading and foreign exchange gains also grew 44 percent to P1.8 billion “as market conditions remained favorable,” the bank said.

The company said it was able to manage expenses, which grew only 4 percent in the three-month period.

The bank also focused on boosting bad loans provisions, which were up 27 percent year on year, bringing the company’s nonperforming loan coverage to 100 percent. This was up from 92 percent at the end of last year.

BDO’s capital adequacy ratio, a sign of the bank’s financial health and ability to expand its portfolio, remained healthy at 14 percent. This was above the central bank’s minimum requirement of 10 percent.

BDO’s shares rose 0.36 percent, or 20 centavos, to close at P54.50 apiece Monday.