San Miguel Corporation’s (SMC) affiliate Bank of Commerce (BankCom) booked a 79 percent jump in net profit to P1.59 billion in the first semester of 2023 from the P886.91 million in the same period last year.

In a disclosure to the Philippine Stock Exchange, the bank said the results were primarily driven by the sustained growth in its core business: higher margins and growth in fee-based income (trust, remittance, investment banking and trade finance).

Total revenues amounted to P4.85 billion, 32 percent more than the P3.67 billion registered last year, due to the steady growth in net interest income, service charges, fees, and commissions, foreign exchange and ROPA related gains.

Net interest income for the first half of 2023 posted P3.95 billion, up 28 percent from the P3.08 billion in the comparable period last year. 

This was due to the solid expansion in the bank’s financial assets, mainly from corporate loans, and effective managing of funding cost, which resulted in a higher net interest margin of 4.35 percent.

Other income, surged 1.5x to P901.20 million from the P583.57 million last year propelled mainly by the robust fee-based revenue generating activities of the bank.

Service charges, fees and commissions posted a 24 percent rise to P448.02 million streaming mainly from Trust, Credit Card, Trade Finance and Investment Banking fees. 

The Bank’s remittance business, also a fee income generator, recorded a promising growth of more than 30 percent since the first quarter of 2023 given the notable performances of overseas partners coupled with the impact of the successful execution of marketing campaigns.

Foreign exchange (FX) gains rose by 18 percent to P80.81 million on account of increased volume of transactions.

The bank recorded a reversal of provisions amounting to P11.83 million reflecting improving credit quality and some recoveries.

Total Operating Expenses, excluding provision for credit and impairment losses, amounted to P2.74 billion, 7.51 percent higher than P2.55 billion in the same period last year primarily due to increase in occupancy cost, compensation and benefits, as well as subscription fees.

BankCom ended the first half of the year with total assets amounting to P207.52 billion, with an ROA of 1.49 percent.

Total Loans and receivables sustained a P3.38 billion or 3.22 percent increase to P108.47 billion mainly on account of additional corporate lending. 

The continued increase in loans resulted in an increase in the loan-to-deposit ratio to 72 percent.

Despite the growth in the loan portfolio, the Bank’s Asset quality remained strong as Net NPL ratio decreased to 0.56 percent, better than the 0.60 percent at the end of 2022. Meanwhile, Gross NPL ratio stood at 2.13 percent.