BDO beats expectations with 51% earnings hike

The country’s largest lender, BDO Unibank, grew its net profit last year by 51 percent to P42.8 billion, moving closer to its prepandemic performance and beating market expectations.

The full-year net profit slightly exceeded consensus forecast of P42 billion, based on Bloomberg market forecast, and inched closer to the P44.19-billion annual profit seen in 2019, the last year before the COVID-19 pandemic erupted.

This 2022, market consensus expects BDO to deliver a net profit of P46.7 billion, exceeding prepandemic levels.

BDO said its full-year profits in 2021 had been buoyed by an 11-percent increase in noninterest income and “normalized” provisions.

“This reflects the bank’s operational resiliency notwithstanding COVID-19-related headwinds depressing loan activity for much of 2021. Overall business conditions appeared to be improving late 2021 however, with loan growth accelerating to 6 percent, ahead of the industry’s 5 percent, as government began to ease quarantine protocols and mobility restrictions,” the bank said in a disclosure to the Philippine Stock Exchange on Thursday.

This performance brought the bank’s return on average common equity to 10.5 percent, up from 7.6 percent in 2020, as improved asset quality allowed it to reduce loan loss provisions compared with the previous year.

Bad loans as a ratio of total loans declined to 2.8 percent from 3.1 percent in the previous year.

Despite the “normalized” loan loss provisioning versus the large buffer required during the hard lockdowns of 2020, BDO reported that bad loan coverage remained high at P1.11 for every peso of soured loans.

On the funding side, BDO reported that for the full year, total deposits rose by 8 percent, driven by the 13-percent expansion in low-cost deposits.

Total capital base increased to P424.5 billion, translating to a capital adequacy ratio of 14.6 percent of risk assets.