BPI profit down 15% in H1

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) recorded a double-digit drop in earnings in the first half as provisions for loan losses more than quadrupled in anticipation of higher defaults from borrowers due to the impact of the COVID-19 pandemic.

In a disclosure submitted to the Philippine Stock Exchange (PSE), BPI said its net income fell by 15 percent to P11.68 billion from January to June compared to P13.74 billion in the same period last year.

For the second quarter alone, the bank’s earnings plunged by 24.6 percent to P5.29 billion from P7.01 billion in the same quarter last year.

The bank beefed up its provisions for loan losses to P15.01 billion or 4.3 times more than the P3.4 billion allocated in the first semester of last year in anticipation of rising non-performing loans (NPLs).

“BPI booked P15.01 billion in provisions for loan losses in the first semester of 2020 as the COVID-19 pandemic ushers in a difficult period for consumers and businesses that could lead to potentially higher NPLs,” the bank said in a statement.

BPI recorded a 14.8 percent jump in revenues to P52.69 billion from P45.9 billion as net interest income booked a double-digit growth of 12.5 percent to P36.4 billion from P32.36 billion.

On the other hand, BPI said non-interest income surged by 20.3 percent to P16.29 billion amid higher securities trading gains.

The bank’s operating expenses was almost steady at P24.19 billion in the first half from P24.28 billion amid lower premises, technology, as well as marketing and product expenses.

BPI’s loan book rose by nearly six percent to P1.43 trillion from P1.35 trillion, as microfinance loans surged by 41 percent, while the corporate and consumer loan segments increased by 8.4 percent and 2.5 percent, respectively.

The bank’s NPL ratio improved to 1.83 percent in the first half of the year from 1.86 percent in the same period last year, while its NPL coverage ratio increased to 140.7 percent from 100.7 percent.

Its deposit base went up by 6.3 percent to P1.76 trillion from P1.66 trillion, driven by the double-digit 11.8 percent rise in checking and savings account deposits.

The total assets of BPI grew by 5.8 percent to P2.26 trillion, while total equity amounted to P278.81 billion, for a common equity tier 1 ratio of 15.63 percent and a capital adequacy ratio of 16.52 percent, both well above regulatory requirements.