Top lender BDO Unibank, Inc. (BDO) reported drop in net income to P4.3 billion in the first half of 2020 from P20.1 billion in the same period last year as it booked total provisions of P22.4 billion in anticipation of potential delinquencies due to the Covid 19 pandemic.
In a disclosure to the Philippine Stock Exchange, the bank said “The provisions are anticipatory in nature, and meant to safeguard the balance sheet. By recognizing the provisions upfront, the Bank can now focus on growing its business as restrictions under (community quarantine) are gradually relaxed.”
BDO said its core businesses held up well amid the COVID-19 pandemic, with Pre-Provision Operating Income (PPOP) up 17 per cent. Net Interest Income (NII) likewise went up by 17 percent.
Customer loans rose by 11 percent to P2.3 trillion, while total deposits went up by nine percent to P2.6 trillion, driven by the 19 percent expansion in Current Account and Savings Account (CASA) deposits which now account for 77 percent of total deposits.
As of end-June 2020, branch operations have been fully restored from only 45 percent at the start of the enhanced community quarantine in mid-March 2020.
Non-interest income settled at 824.8 billion, led by fee-based income with 813.4 billion and insurance premiums with P7.0 billion.
Gross non-performing loan (NPL) ratio increased to 1.95 percent while NPL cover settled at 139.4 percent.
Total capital base settled at P367.5 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio at 13.8 percent and 12.7 percent, respectively, despite the upfront provisions.
These ratios are well above regulatory minimum and deemed sufficient to support the Bank's anticipated asset growth as well as regular quarterly dividends.
“Going forward, BDO believes that its solid balance sheet, sustained business growth, and dedicated team effort will allow the Bank to weather the COVID-19 crisis and sustain its long-term performance post-pandemic,” the bank said.