Bank of Commerce (BankCom), an affiliate of San Miguel Corporation (SMC), posted a record net income of P2 billion for the first nine months of 2023, outperforming the full-year 2022 profit of P1.8 billion by 12 percent.

In a disclosure to the Philippine Stock Exchange (PSE), the bank said it is also 35 percent higher than the P1.49 billion net income in the same nine-month period last year.

Sustained growth in the bank’s core revenue streams, higher interest margins and growth in fee-based income (investment banking, credit card, trust, and trade finance) were the main drivers of the solid performance.

For the first nine months of 2023, total revenues surged 25 percent to P7.30 billion from the P5.82 billion posted last year, mainly attributable to the notable growth in net interest income and service charges, fees, and commissions

Net interest income, which accounts for 83 percent of the total revenues, increased to P6.08 billion, 1.3 times the P4.82 billion in the previous year.

This is mostly driven by sustained growth in the bank’s earning assets, particularly corporate loans. Also, despite the rising interest rate environment, the bank effectively managed funding cost, resulting in a higher net income margin of 4.24 percent.

Other income rose to P1.22 billion, up 21 percent from P1 billion in 2022, owing to steady flow of the bank’s fee-based income.

Service charges, fees and commissions rose to P640.25 million largely driven by Investment Banking, Credit Card, Trust, and Trade Finance fees.

The bank raked in a total of P89.88 million in underwriting commissions for the period, representing 14 percent of the total service charges, fees and commissions.

Meanwhile, foreign exchange (FX) gains which amounted to P115.01 million, inched up by 0.6 percent from P114.31 million.

The bank maintains a conservative stance by setting aside P222.43 million as provision for credit and impairment losses. Non-performing loan coverage ratio was at 97.88 percent.

Operating expenses, excluding provision for credit and impairment losses, totaled P4.33 billion, 10 percent up from the P3.94 billion in the comparable period last year on the back of increases in compensation and benefits, service fees and commission, subscription and management and professional fees.

BankCom’s total assets grew by three percent to P224.31 billion from P217.52 billion as of the end of 2022, translating to a return on assets of 1.21 percent.

Total loans and receivables, comprising almost 50 percent of total assets, increased by six percent to P111.58 billion mainly due to sustained booking of corporate loans. The robust growth in loans resulted in an increase in the loan-to-deposit ratio to 75 percent.

Despite the growth in the loan portfolio, the Bank’s Asset quality remained strong as Net NPL ratio improved to 0.51 percent, better than the 0.60 percent at the end of 2022. Meanwhile, gross NPL ratio stood at 1.98 percent.

The bank’s capital funds rose to P29.80 billion, six percent higher than the P28.03 billion in 2022, on account of higher retained earnings for the period due to continued profitable operations.