The bank’s net profit would have been much higher had it not been for a loan-loss provisioning of P2.5 billion.
President and chief executive officer Simon R. Paterno said that being a development bank, DBP normally takes more risks in its lending program.
"We are taking more risks so we are also building our reserves for possible losses," Paterno told newsmen yesterday during the bank’s 56th anniversary celebration.
For this year, Paterno said the bank does not expect to dramatically improve its profit performance over last year.
"External conditions are unpredictable, including threats of international war," Paterno said, adding that lending would be their priority rather than making huge profits.
DBP’s past due ratio stood at a comfortable 13 percent versus the banking system’s average of roughly 20 percent.
However, officials admitted that they expect this to increase dramatically with their aggressive lending programs in the next two years. "NPLs (non-performing loans) will go up," Paterno admitted.
The DBP has also formed an asset management group tasked to manage and dispose of both existing and anticipated bad debts and assets.
With a total portfolio of over P70 billlion, DBP expects to lend as much as P35 billion to small and medium enterprises (SME) while the balance will be lent out to major infrastructure programs like transportation and power under its Sustainable Logistics Development Program (SLDP).
The P1-billion dividend turned over by DBP was the biggest amount ever by the bank. Previous dividends were P756 million in 2001 and P520 million in 2000.
Finance Secretary Jose Isidro Camacho said the dividend would reflect in the bank’s January to March 2003 earning even if the amount covers the 2002 period. "We are operating on a quarterly basis," Camacho, who received the P1-billion manager’s check from DBP, said. – Ted Torres