BPI income up 23% to P2.3B in Q2

Bank of the Philippine Islands (BPI), the country’s second largest banking group, posted a P2.3 billion net profit in the second quarter this year, up 23 percent from P1.9 billion a year earlier, driven by higher interest and fee-based income.

BPI, owned by conglomerate Ayala Corp. and Singapore’s DBS Group, said its revenues in the second quarter grew by a similar 23 percent to P7 billion. In the second quarter of 2004, BPI posted total revenues of P5.7 billion.

BPI said it booked gains from asset sales, but it did not provide a complete set of results. It also benefited from gains in securities trading during the quarter.

The bank’s return on equity stood at 15.9 percent at the end of June, 13.3 percent higher than last year. Return on assets, meanwhile, stood at two percent compared with 1.8 percent last year.

Total provision for probable loan losses was increased to P1 billion in the first half from P600 million in the same period last year to build up valuation reserves for foreclosed assets, BPI said.

As of end-June, BPI’s total assets amounted to P473.7 billion, with total deposits of P366.9 billion. Gross loans went up 4.6 percent to P226.9 billion, while non-performing loans based on the central bank’s definition improved to 4.6 percent from 5.6 percent last year.

At the end of June, BPI’s market capitalization stood at P108.8 billion while its book value was P55.9 billion.

BPI announced last week that it sold P2.4 billion worth of non-performing loans (NPLs) to Avenue Capital Group, a leader in the distressed assets market in the US.

It is the second such transaction undertaken by BPI, after it sold P8.6 billion worth of NPLs to Philippine Asset Investment (SPV-AMC) Inc. last year.

Also last week, BPI struck a deal to acquire medium-sized Prudential Bank, which could eventually cost it P6.13 billion if all the smaller bank’s shareholders agree to sell their shares to BPI.

Under the agreement, BPI will acquire a 73-percent stake in Prudential Bank and its ownership could be raised to at least 80 percent following a tender offer to be made to Prudential Bank’s remaining shareholders.

The tender offer starts Monday and ends on Aug. 26.