BDO hits 2014 profit goal

Banco de Oro Unibank, the country’s leading bank, hit its P22.8-billion net profit goal for 2014, establishing a new record high even as the volatility in global financial markets gnawed on the banking industry’s treasury earnings.

BDO’s net profit last year slightly exceeded the previous year’s P22.6 billion. The 2014 performance was attributed by the bank to the strong expansion  of its core lending business.

In a report to the Philippine Stock Exchange yesterday, BDO said its recurring earnings—excluding the impact of one-off gains booked in 2013— had expanded by 18 percent last year.

The growth in its customer loan portfolio outpaced that of the industry with a 20-percent expansion to hit P1.1 trillion. Total deposits rose by 11 percent to P1.5 trillion, driven primarily by a 24-percent increase in the low-cost current account/savings account deposit base.

Net interest income grew by 19 percent to P51.2 billion while fee-based service income contributed P18 billion, up by 16 percent year-on-year.

The bank said the strong performance of these core revenue streams had compensated for the decline in trading and foreign exchange gains. As such, gross operating income rose by 8 percent to P80.7 billion.

On the expenditure side, the bank kept its operating expense growth at 12 percent despite the sustained business and branch expansion.

BDO set aside P5.1 billion in provisions for the year, even as asset quality continued to improve, with gross non-performing loan (NPL) ratio falling further to 1.3 percent from 1.6 percent in 2013. In line with prudent provisioning policies, the bank increased its NPL cover to 188 percent in 2014 from 173 percent in 2013.

The bank’s capital base stood at P180 billion at end 2014, with both the capital adequacy ratio (CAR) and common equity tier 1 ratio reaching 14.6 percent and 12.4 percent, respectively, well above the minimum regulatory requirements under Basel 3 framework.

Basel 3 introduced a complex package of reforms designed to improve the ability of banks to absorb losses.

“With a strong business franchise, sustained growth strategy and solid capital base, BDO remains well-positioned to take advantage of emerging opportunities as well as face potential market challenges,” the bank said.

In the meantime, BDO Leasing and Finance Inc., a subsidiary of BDO,  posted a 20-percent expansion in net income to P504 million in 2014.

Its strong performance was driven by the rise in lease and loan portfolio to P24 billion as BDOLF leveraged on its parent company’s extensive market reach.

Going forward, the company will focus on growth areas to maintain its position as a leading provider of leasing and financing services.