MANILA, Philippines - Higher interest income drove Bank of the Philippine Islands’ net income 37 percent higher to P13.2 billion in the first nine months of the year, the bank said in a disclosure to the Philippine Stock Exchange.
BPI attributed the solid performance to strong revenues, which were up 17.6 percent, coming from both net interest income and non-interest income.
Despite the prevailing low interest rate environment, net interest income was higher by 7.8 percent as the average asset base expanded by almost P50 billion or 6.4 percent.
Net interest spread was relatively flattish notwithstanding the full recognition of the non-remuneration on statutory and liquidity reserves maintained as deposits with the Bangko Sentral ng Pilipinas (BSP).
BPI also continued to fund its lending growth with low cost funds.
Non-interest income was 34 percent higher, mainly driven by higher securities trading gain.
Other income and fees and commissions also posted increases.
Operating expense went up a manageable 4.8 percent, with increments mainly on premises and technology related costs as well as other operating expenses.
Impairment losses were up 54 percent as provisions were set up for the strengthening of the actuarial reserves for the pre-need subsidiary.
For the third quarter, impairment losses were 1.2 times the previous year. Revenues were, however, up five percent, thereby resulting in a nine percent improvement in net income to P3.8 billion.
Loans reached P475 billion as the growth rate of 18 percent was sustained through the third quarter. Corporate and consumer loans continued with their double-digit momentum with 18 percent and 16 percent, respectively, on a year on year basis.
Asset quality as reflected in the net 30-day NPL ratio improved to 1.7 percent from last year’s 2.3 percent, with reserve coverage at 137.9 percent.
Deposits reached P697 billion or a 12 percent increase from last year. In addition, assets under management increased 15 percent to P760 billion.
At end-September, BPI’s market capitalization stood at P284 billion, the highest among domestic banks.
“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,” BPI president and CEO Aurelio R. Montinola III said.
This is line with our goal of achieving a sustainable return on equity of 15-16 percent. We are however faced with the risks of narrowing net interest margin (NIM) amid the recent 25 basis points cut in the benchmark policy rate of the BSP. Nevertheless, we will strive to maintain our NIM at previous year’s level by continuously growing the higher yielding loan segments and the low cost current and savings deposit on the funding side.”