BDO Leasing earns P40 million in 9 months

MANILA, Philippines — BDO Leasing and Finance Inc. (BLFI) earned 70 percent less in the nine months to September due to  the restructuring of its business last year.

In a disclosure to the Philippine Stock Exchange, BLFI  said its profit declined to P39.8 million from P134.6 million a year ago.

Most of the income was derived from fair value gains which the firm took from the capital it poured in unit investment trust funds (UITFs).

BLFI maintains an asset pool worth P6 billion, all practically invested in UITFs. However, the investments in UITFs failed to save BLFI from suffering a drop in its profit during the period.

BLFI attributed the decline in its net income to BDO Unibank Group’s overhaul of its leasing business last year. The bank decided to restructure the portfolio to take into account the growing needs of clients in the face of new accounting regulations covering lease transactions.

The restructuring resulted in the sale of nearly all of its assets to BDO Unibank Inc., BDO Life Assurance Co. Inc. and BDO Finance Corp.

“BLFI ceased to operate as a leasing company and completed the assignment and transfer of its leasing and financing business to an affiliate, BDO Finance Corp., on Oct. 19, 2020,” BLFI said.

“BDO Finance was established to offer customers continued access to lease products and services and likewise assumed the lease transactions booked in BLFI to ensure continuity to the latter’s existing clients,” the firm added.

With its assets transferred to sister entities under BDO, particularly BDO Finance, BLFI is left to operate as a listed firm of the parent bank. On the other hand, BDO Finance now offers direct lease, sale and leaseback arrangements, mortgage lending and factoring services.

Last year, BLFI’s net income grew over five-fold to P252.3 million, from P46.8 million in 2019, as the firm took advantage of its asset yields and reduced costs. Expenses dropped by a third to P1.95 billion, from P2.95 billion, on decreased interest rates and less borrowing volume.

However, revenue decreased by more than 22 percent to P2.36 billion as the firm scaled down its operations due to the transfer of its assets.