THE Bank of the Philippine Islands (BPI) blamed heightened provisioning against loan losses for the 22.1-percent drop in its net earnings in the first nine months of 2020.
BPI shares skidded by 3.69 percent, or P2.80, to close at P73 each amid the 1.05-percent uptick for the benchmark index on Thursday.
The Ayala-led bank saw its profits in the first three quarters decline to P17.17 billion from P22.03 billion a year ago for the same period. For the third quarter alone, net income fell by 33.7 percent to P5.50 billion from P8.29 billion year-on-year.
The loan-loss reserves amounting to P21.06 billion dragged the bottomline figures of the bank for the period. The buffer, which grew by over four-fold from P4.58 billion last year, was in anticipation of a surge in nonperforming loans (NPL) amid the economic slowdown due to the coronavirus pandemic.
The 9-month revenues, meanwhile, climbed by 9.7 percent to P77.88 billion, the bank said. Net interest income rose by 11.8 percent to P54.40 billion in the first three quarters because of a 5.7-percent growth in average asset base. Meanwhile, non-interest income for the period expanded by 5.1 percent to P23.48 billion on the back of healthy securities trading gains.
In the first nine months, the bank said its operating expenses dipped by 1.6 percent to P36.48 billion “due to lower premises, technology and various discretionary costs such as marketing, advertising, and management and professional fees.”
As of end-September, BPI’s loan portfolio inched up by 0.9 percent to P1.38 trillion, supported by mortgage and corporate loan segments. Total deposits for the period, meanwhile, grew by 4 percent to P1.68 trillion because of 14.7-percent growth in current account and savings account deposits.
Total assets increased by 3.6 percent to P2.2 trillion as of end-September. This, as the common equity Tier-1 ratio and capital adequacy ratio stood at 15.46 percent and 16.35 percent, which are both above minimum regulatory requirements.
BPI raised P21.6 billion from the issuance of its Covid Action Response (CARE) bonds in August to finance eligible micro-, small- and medium-scale enterprises, one of the sectors severely impacted by the pandemic. The bonds carry an interest rate of 3.05 percent per annum and have a tenor of 1.75 years.
The original size of the offering was P3 billion, but it was oversubscribed by over seven times, thanks to robust demand.
“The overwhelming reception of investors to the bonds highlights the potential of the social bond market, which the [Securities and Exchange Commission] has put forward as a funding source for projects to address the devastating impact of the global health crisis,” the bank explained.
