BDO banks on strong balance sheet vs COVID

MANILA, Philippines — BDO Unibank Inc., the country’s largest bank, is confident of weathering the impact of the coronavirus disease 2019 or COVID-19 pandemic on the back of its strong balance sheet.

Nestor Tan, president and chief executive officer of BDO, said 2020 is going to be a challenging year as the country’s gross domestic product (GDP) is expected to contract amid the economic fallout from the coronavirus outbreak.

“2020 will be a very challenging year to say the least. The Philippines is expected to post a contraction in GDP as the economy absorbs the adverse effects of COVID-19 and the enhanced community quarantine, among others,” Tan told the bank’s stockholders during a virtual annual meeting yesterday.

Tan also cited job losses, the repatriation of more overseas Filipino workers resulting in lower remittances, slumping tourism revenues due to mobility and travel restrictions, and weak trade performance.

He said the bank is also wary of the second wave of infection.

Tan reported the bank’s net income declined by 10 percent to P8.8 billion in the first quarter of the year from P9.8 billion in the same quarter last year as non-interest earnings plunged by 39 percent to P9 billion from P14.9 billion.

BDO’s booked trading and foreign exchange losses amounted to P4.3 billion, reversing the P2.2 billion gains last year. Its provision for loan losses jumped by 76 percent to P2.3 billion from P1.3 billion.

BDO has raised its war chest versus bad loans with an additional P20 billion, bringing the amount of provisions to a record P22.3 billion.

He clarified the bank is not yet experiencing losses and the bank’s capital adequacy ratio would not be impaired and is expected to remain stable.

“We believe BDO will weather this crisis given a solid balance sheet and strong business franchise, placing the bank in a good position once the economy bounces back,” Tan said.