BDO Unibank Inc. (BDO) reported a 6.2-percent increase in net income to P11.741 billion in first half, higher than the P11.055 billion recorded in same period last year on robust core income growth.
The bank’s net income of P11.74 billion was driven mainly by sustained momentum in core lending and deposit-taking businesses.
BDO said net interest income rose 10 percent to P27.1 billion due to an expansion in earning assets.
BDO’s customer loan portfolio went up 16 percent to P1.1 trillion, while current and savings account deposits advanced by 17 percent.
“Our volume numbers are as expected. We are feeling margin pressures, though, from competition,” BDO President Nestor Tan told the BusinessMirror.
The bank saw notable gains from its fee-based, as well as Treasury activities.
Income from fee-based, services and Treasury activities increased by 14 percent and this helped further boost the bank’s overall performance.
The universal lender’s recurring revenue streams continued to account for over 83 percent of total operating income.
Trading and foreign-exchange gains went up 7 percent and 450 percent to P4.4 billion and P984 million, respectively, as the bank capitalized on market opportunities during
the period.
Operating expense increased by 10 percent to P26.7 billion.
From net income of P11.741 billion, total comprehensive income for the first semester stood at P8.8 billion.
This include a P2.9-billion drop in unrealized gains on available-for-sale (AFS)
securities, a negative P22-million translation adjustment related to foreign operations, a P19-million reversal of revaluation increment and a P4-million loss on retirement benefits.
According to JP Morgan Securities Singapore Private Limited, BDO is expected to deliver a net income of P5.84 billion for the second quarter, up 5 percent year-on-year, and down by 5 percent quarter-on- quarter despite continued growth in net interest income, which was up by 3 percent quarter-on-quarter.
“We expect Treasury income to normalize, affecting both topline and tax rate. A key data point to watch for BDO is the Common Equity Tier 1 (CET1) ratio as the bank ended first quarter with CET 1 of 11.9 percent at the consolidated level and 10.6 percent at the parent level.
The domestic systematically important banks requirement of 11 percent will be phased in from 2017 to 2019,” JP Morgan analyst Harsh Wardhan Modi said.
BDO maintained a solid capital base of P181 billion, with both the capital adequacy ratio and CET1 ratio at 13.6 percent and 11.5percent, respectively, as of the first half of 2015.
BDO’s asset quality showed sustained improvement with gross nonperforming loan ratio dropping further to 1.2 percent from 1.6 percent a year-ago.
“With a strong business franchise, sustained growth strategy and solid capital base, BDO remains well-positioned to take advantage of opportunities in a growing economy,” the bank said.
BDO has one of the largest distribution networks, with 897 operating branches and over 2,700 automated teller machines nationwide.