BDO 2009 income equals 2007 performance

MANILA, Philippines - Banco De Oro Unibank Inc. (BDO) has practically equaled its outstanding performance of 2007, when it reported a net income of P6.1 billion last year, from the record setting P6.57 billion.

In fact, it grew well beyond the original target of P5.5 billion, for an increase of 173 percent over the 2008 earnings of P2.2 billion.

BDO president and chief executive officer Nestor Tan said that the commercial bank of the SM Group of Companies would be going to the capital markets to raise fresh funds.

“Our capital raising is intended to support our growth,” Tan said, adding that the amount and form have yet to be finalized.

BDO is deep in discussions for the possible acquisition of troubled Export and Industry Bank. Acquiring the medium-sized bank as a “white knight” will give it incentives under the merger and acquisition package of the Bangko Sentral ng Pilipinas (BSP).

BDO presently operates 700 branches and 1,200 ATMs.

It is reportedly also in the market for expanding its insurance business and the bank’s branch network. After failing to acquire the Philippine American Life and General Insurance Co. (Philamlife), it reinforced its hold on Generali Pilipinas.

But Generali Pilipinas is not yet a dominant player in the mode of Philamlife, being ranked only within the top 10 life insurance companies.

Meanwhile, BDO’s operating income last year was generated from core businesses, leading to reduced reliance on volatile trading income.

Net interest income increased 33 percent to P30.6 billion in 2009, given a larger level of earning assets and improved margins. Net interest income was driven by the 20-percent expansion in gross customer loans to P472.7 billion, and growth in low-cost deposits.

Loan demand was sustained across all market segments, while low-cost deposit growth was fueled by additional branch redeployments. Total non-interest income grew 13 percent, while fee-based service income, exclusive of trading income and one-time gains, grew 12 percent.

Non-performing loan (NPL) ratio dipped to 3.2 percent from four percent as of the 4th quarter of 2008. Nevertheless, the Bank maintained its conservative outlook setting aside provisions of P6.2 billion, thereby improving its NPL coverage ratio to 80 percent.