BPI’s 9-month profit up 37%

Ayala-led Bank of the Philippine Islands posted a 37-percent jump in its nine-month net profit year on year to a record high P13.2 billion, as extraordinary trading gains complemented the rise in interest earnings.

This translated to a return on equity of 19.2 percent and return on assets of 2.1 percent, the bank disclosed to the Philippine Stock Exchange.

For the third quarter, BPI’s net profit grew by 9 percent year on year to P3.8 billion.

“Normalizing the impact of the opportunistic recognition of securities trading gains, BPI’s adjusted return on equity and return on assets as of September 2012 would be 16.9 percent and 1.9 percent, respectively. This is in line with our goal of achieving a sustainable return on equity of 15-16 percent,” BPI president Aurelio R. Montinola said in a statement.

“We are, however, faced with the risks of narrowing net interest margin (NIM) amid the recent 25-basis point cut in the benchmark policy rate of the BSP,” he said.

BPI grew its net interest income by 7.8 percent as the bank boosted its asset base by 6.4 percent or P50 billion. Its loan book expanded by 18 percent year-on-year to P475 billion.

Non-interest income in the first nine months surged by 34 percent driven mainly by higher securities trading gain. Other incomes also posted increases in the first three quarters.

With the expansion in both interest and non-interest income, BPI’s revenue went up by 17.6 percent year on year in the first nine months.

The 18-percent increase in BPI’s loan book was fueled by the rise in corporate and consumer portfolios which increased by 18 percent and 16 percent, respectively.

BPI said it also continued to fund its lending growth with low-cost funds. Deposits reached P697 billion, up by 12 percent from last year. Assets under management rose by 15 percent year on year to P760 billion.

On the expenditure side, BPI’s operating expense rose by 4.8 percent, with increments mainly on premises and technology related costs, and other operating expenses. Impairment losses were 54 percent up as provisions were set up for the strengthening of the actuarial reserves for the pre-need subsidiary.

Asset quality as reflected in the non-performing loan ratio to total loans improved to 1.7 percent from 2.3 percent last year, with reserve coverage at 137.9 percent.