BPI profit down 5% in 1st quarter

MANILA, Philippines — Earnings of Ayala-led Bank of the Philippine Islands (BPI) slipped by five percent to P6.39 billion in the first quarter from P6.72 billion in the same quarter last year as the coronavirus disease 2019 or COVID-19 pandemic ushers in a difficult period for consumers and businesses.

BPI president and chief executive officer Cesar Consing said in a virtual press briefing the 168-year old bank alloted P4.23 billion in provisions for losses from January to March, 2.4 times more than last year’s P1.8 billion as a result of the COVID-19 crisis.

“This is in expectation of potential non-performing loans in the future. This is not something that we see today, but with the kind of activity or lack of business mobility activity that we see out there, whether it be corporates or consumers, there is no question that loan losses will be in the future a prominent thing,” Consing said.

The listed bank recorded a double-digit growth in total revenues to P25.26 billion in the first quarter, 10.9 percent higher than last year’s P22.78 billion.

BPI’s net interest income went up by 13 percent to P18.14 billion with net interest margin improving by 24 basis points to 3.63 percent from 3.39 percent as lower asset yields were offset by lower cost of funds.

On the other hand, non-interest income increased by 5.8 percent to P7.12 billion, primarily from higher securities trading gains.

The bank’s operating expenses inched up by 3.8 percent to P12.53 billion in the first quarter from a year-ago level of P12.07 billion. This translated to a lower cost-to-income ratio of 49.6 percent from 53 percent.

The loan book of BPI grew by 7.3 percent to P1.45 trillion as of end-March from P1.35 trillion as lending to the microfinance segment jumped by 66.6 percent followed by small and medium enterprises (SMEs) at 14.2 percent, consumer at 9.5 percent and corporate at 6.7 percent.

BPI’s deposit base went up by 4.3 percent to P1.68 trillion from P1.61 trillion, translating to a loan-to-deposit ratio of 86.3 percent from 83.9 percent.

The bank’s indicative non-performing loan (NPL) ratio increased to 1.82 percent in the first quarter from last year’s 1.85 percent, while NPL coverage ratio increased to 109.02 percent from 92.55 percent.

BPI’s total assets inched up by 5.1 percent to P2.19 trillion from P2.08 trillion, while total equity amounted to P272.7 billion with an indicative common equity tier 1 ratio of 15.19 percent and a capital adequacy ratio of 16.08 percent.

Consing, who is also president of the Bankers Association of the Philippines (BAP), said the Philippine banking industry is prepared for the crisis as the economy is well positioned compared to the Asian financial crisis in 1997 and the global financial crisis in 2008.

Maria Theresa Marcial-Javier, executive vice president and chief financial officer at BPI, said the bank’s earnings would likely hold up in the second quarter.

“Based on the signs, we are seeing in terms of loan and deposit growth, we have very good reason to believe that the second quarter earnings will hold up very well even if there is a slow down in economic activity and therefore there is a slow down in new loan releases,” Javier told reporters.

Javier said the bank has raised close to P50 billion in the domestic debt market via the issuance of bonds in the first quarter of the year.

BPI successfully raised P15.3 billion in two-year peso bonds in January, followed by another P33.9 billion via a 1.5-year peso bond issuance in March further enhancing the bank’s liquidity position.