BPI posts 26% profit drop on higher provisions

Bank of the Philippine Islands posted a 25.7 percent drop in net income to P21.4 billion last year from the P28.8 billion earned in 2019 due to higher provisions for loan losses.

In a disclosure to the Philippine Stock Exchange, the bank said its fourth quarter 2020 net income was P4.2 billion, a 37.4 percent decrease from the preceding year’s P6.8 billion. 

“The decline in earnings was a result of the Bank booking P28.0 billion in provisions for loan losses for the full year 2020, as the economic slowdown leads to an increase in non-performing loans,” BPI said.

This provision is five times more than the P5.6 billion set aside in 2019. The Bank’s year-end 2020 non-performing loan ratio was 2.68 percent, with NPL Coverage ratio at 115.2 percent. 

Total revenues for the year increased by 10.5 percent to P101.9 billion as net interest income grew by 10.2 percent to P72.3 billion, a result of a 5.8 percent expansion in average asset base supported by a 14-basis point expansion in Net Interest Margin to 3.49 percent.

Non-Interest Income climbed to P29.7 billion, up by 11.1 percent versus 2019 levels, on higher securities trading gains. Fee income fell by 5.0 percent to P19.5 billion.

Total Operating Expenses in 2020 amounted to P48.1 billion, almost flat compared to the previous year. Cost-to-Income Ratio stood at 47.2 percent, an improvement from the 52.4 percent recorded in the prior year. 

Total Loans as of December 31, 2020 was P1.4 trillion, a 4.6 percent decline year-on-year, primarily as a result of a slowdown in corporate lending.

Notably, the mortgage and microfinance loan segments ended the year with moderate growth rates of 6.6 percent and 5.7 percent, respectively.

Total Deposits increased to P1.7 trillion, up 1.2 percent year-on-year, as CASA growth of 16.6 percent offset a 33.2 percent reduction in time deposits. The Bank’s CASA Ratio was 79.6 percent, while the Loan-to-Deposit Ratio was 82.0 percent.