BPI profit doubled in Q1

Ayala-led Bank of the Philippine Islands doubled its net profit in the first three months to P5.8 billion from a year ago, marking its best quarterly earnings in history, as large trading gains complemented an increase in core interest earnings.

In the same quarter last year, BPI posted P2.8 billion in net profit. This year, the bank said its core income was “on track” with its expectations while its operating results were “enhanced by opportunistic securities trading gains.”

“As uncertainty in the global economy still prevails, we decided to realize our securities trading gains early in the year. We strongly believe in organic growth, and our hard work is paying off,” BPI president Aurelio Montinola III said in a statement.

“While our first-quarter results were excellent, this should not be construed as an indication of the succeeding quarters in view of the one-off securities trading gains. We will continue to focus on growing our core income guided by our goals of quality sustainable growth, customer experience innovation and team-oriented employee engagement,” he said.

As interest rates showed some volatility in the first few months of the year while the equity markets continued its uptrend, BPI sold down some of its securities inventory and booked about P3.7 billion in trading gains.

While first-quarter earnings were boosted by extraordinary trading gains, core income remained strong as BPI grew its loan book by 20 percent, faster than its 12 to 15 percent projection for the full year. Lending to all segments continued to be vibrant, the bank said.

Net interest income improved by 8 percent and was 12 basis points ahead of the previous year. The peso amount of net interest earnings was yet to be disclosed but computed based on the increase from last year’s level, net interest earnings this year would be about P6.8 billion.

Other income was also better mainly due to higher insurance earnings and trust fees, BPI said. Assets under management reached P716 billion, 15 percent higher than year-ago level.

On the funding side, deposits grew by 7 percent year on year in the first quarter. BPI aims to grow its deposit base by about 10 percent this year.

With the substantial one-off trading gains, BPI said it had taken the opportunity to accelerate its contribution to its retirement fund so it would earn more and compensate for the estimated lower investment yield for the rest of the year.

Operating expenses were higher by 17 percent, largely on increases in manpower, premises, technology and variable costs. Impairment losses were also higher due to additional provisions for non-credit-related items, including actuarial reserves for the preneed insurance business.

Asset quality improved further as reflected in its net 30-day nonperforming loan ratio of 2 percent, down from last year’s 2.4 percent. Reserve cover amounted to 130 percent, reflecting the bank’s conservative provisioning.

Its market capitalization stood at P263 billion as of end-March. Its Basel 2 capital adequacy ratio stood at 15.5 percent of risk assets.

In the meantime, the Bangko Sentral ng Pilipinas has approved BPI’s declaration of a special cash dividend of 50 centavos per share in addition to its regular cash dividend of 90 centavos per share for the first half of the year payable on May 12.