By James A. Loyola
BDO Unibank, Inc. (BDO), the country’s top lender, posted a 6 percent improvement in net income to P21.5 billion for the first nine months of the year on the back of strong third quarter earnings.
Excluding the results of BDO Life, which was impacted by PFRS9’s mark-to-market (MTM) on its investment portfolio and One Network Bank (ONB) with its ongoing investment in the Micro-SME (MSME) lending business, net income year-to-date (YTD) would have registered a 13 percent growth.
In a disclosure to the Philippine Stock Exchange, the bank said it delivered an 18 percent hike in earnings to P8.4 billion in the third quarter of 2018 compared to the same quarter a year-ago.
Third quarter earnings were stronger due to solid expansion from BDO’s core lending and deposit-taking, life insurance and fee-based businesses.
The third quarter 2018 net result also represented a 15 per cent rise quarter-on-quarter (QoQ) from the P7.3-billion profit recorded in the second quarter this year. Lending operations posted a 17 percent rise in gross customer loans to almost P2.0 trillion in the first nine months of 2018, led by the middle-market and consumer segments.
Asset growth was funded by the 12 percent increase in total deposits to P2.3 trillion, with low-cost CASA (current accounts and savings accounts) ratio steady at 70 percent.
As such, net interest income (NII) expanded by 20 percent to P71.5 billion, with net interest margin (NIM) increasing year-on-year and QoQ due to upward loan re-pricing, and managed funding costs given a large low-cost CASA base.
Non-interest income rose to P35.8 billion on the back of insurance premiums and fee- based income which grew by 21 percent and seven percent, respectively.
However, these growth numbers were offset by the 71 percent decline in trading and foreign exchange gains due to the continuing volatility in the capital markets. Overall, gross operating income went up by 13 percent to P107.3 billion.
The Bank remained prudent as it set aside provisions amounting to P5.5 billion even as gross non-performing loan (NPL) ratio trended lower to 1.1 percent from 1.2 per cent in the second quarter of 2018 and 1.3 percent in the third quarter of 2017, despite a higher interest rate environment.
NPL cover likewise increased to 175 percent from 158 percent in the second quarter of 2018 and 136 percent in the third quarter of 2017.