BDO back in the black on lower bad loan buffer

The country’s leading lender BDO Unibank shored up its profitability in the second quarter as provisions for credit losses declined from the same period last year, the period when pandemic-induced lockdown protocols that bludgeoned businesses were at their toughest.

BDO chalked up a second quarter net profit of P11.04 billion, a turnaround from the P4.48-billion rare net loss incurred in the same period last year. Sequentially, this slightly improved from the P10.39-billion net profit posted in the first quarter of this year despite the reimposition of tighter quarantine restrictions in early April.

For the six-month period, BDO delivered P21.4 billion in net profit, nearly five times better than the P4.3-billion bottom line in the same period last year. This jacked up its return on equity to 10.75 percent from just 2.27 percent in the same period last year.

“BDO’s solid balance sheet, healthy capital position and sustained earnings performance put the bank in a good position to leverage on the country’s economic recovery,” the bank said in a disclosure to the Philippine Stock Exchange on Monday.

In the second quarter, BDO’s impairment losses declined to P3.85 billion compared to the P20.17-billion buffer set aside in the same period last year at the height of domestic mobility constraints. This brought six-month loan loss provisions to P6.78 billion, much lower than the P22.43-billion provisioning against loan delinquencies last year.

About 3.1 percent of total loans had turned sour during the first semester, which BDO said was below its worst case scenario of a 4-5 percent nonperforming loan ratio. For every P1 of bad loans, the bank provided an equal P1 in loss provisions during the period. INQ