MANILA, Philippines - BDO Unibank Inc., the country’s largest lender, registered a net income of P5.5 billion in the first quarter, 46 percent lower than the previous year, due to the absence of exceptional trading gains, the bank said in a disclosure to the Philippine Stock Exchange.
“However, it is noteworthy that the bank’s core businesses remained in high gear with further gains in loans and low cost deposits,†BDO said.
Excluding the one-off gains booked in 2013, the bank’s first quarter operating income reflected a 31-percent growth in terms of solid recurring earnings.
Net interest income during the three-month period grew 27 percent year-on-year, and continued to be the main earnings driver at P12.2 billion. This is primarily attributed to the bank’s thriving customer loan business which grew 23 percent to hit P956 billion, supported by a 37-percent growth in its low cost deposits.
The bank’s total deposit base currently stands at over P1.3 trillion.
Fee based income from payments, transaction banking, and asset management services also went on to expand at a rate of 16 percent year-on-year; leading to an income contribution of P3.9 billion. Treasury related activities were also off to a good start with a contribution of P2.2 billion in earnings.
With all key businesses operating at elevated levels, the bank was able to sustain its previous quarter’s pre-provision operating profit (PPOP) of over P7 billion despite a slight uptick in operating expense brought about by volume related expenditures.
The bank’s asset quality was buoyed by further improvement in its non-performing loan (NPL) ratio to 1.5 percent. NPL cover, on the other hand, expanded to 175 percent as the bank maintained its conservative provisioning given the uncertainty in the market.
BDO president Nestor V. Tan noted that the bank’s full year 2013 earnings reached a record P22.6 billion, exceeding its earlier P20.4-billion earnings guidance, and 56 percent higher than the P14.5-billion profit in 2012.
Tan said the outstanding performance was attributed to increased earnings from its core businesses; mainly lending and deposit taking and fee-based services, accompanied by notable trading gains. Despite its continued business expansion, operating expense growth was well managed, and asset quality continued to improve. Capital remained well above the Basel III minimum requirement. As a result, the bank achieved a 14.5-percent return on common equity (ROCE).
The bank opened 52 new branches in 2013, and followed this up with eight new branches so far this year. Most of these were set up outside Metro Manila, thereby bringing its total domestic branch network to 822 as of end-March 2014.
In view of the bank’s outstanding performance in 2013, a special cash dividend of P 0.90 per share was approved at its board meeting yesterday.
The bank likewise disclosed its earnings guidance of P22.8 billion for 2014. While the figure is flat compared to 2013, it reflects the replacement of one-time trading gains earned in 2013 with high quality earnings derived from the core businesses, and indicates the sustainability of the bank’s business franchises.