Bank of Commerce (BankCom), an affiliate of San Miguel Corporation (SMC), posted a 10 percent year-on-year increase in unaudited net income to P2.21 billion in the third quarter of 2024, mainly due to higher revenues.

The bank said in a disclosure to the Philippine Stock Exchange (PSE) that this translated to a return on equity (ROE) and return on asset (ROA) of 9.27 percent and 1.26 percent, respectively.

The increase was driven by growth in its core business, mainly net interest income, alongside increase in fee income. 

Core business growth mainly came from expansion in corporate loans and program lending primarily to SMC ecosystem clients.

The bank’s strategy of improving its revenue streams and prudent spending resulted in a cost-to-income ratio of 62 percent.

BankCom’s strong revenue growth was mainly due to higher net interest income, service charges, fees and commission, and trading gains.

Net interest income increased 11 percent to P6.76 billion from the P6.08 billion recorded in the third quarter of 2023. 

The upward trajectory was due to the expansion in earning assets, primarily from corporate and consumer loans as well as financial assets at fair value. 

The faster growth in revenues from earning assets than interest bearing liabilities translated to an improvement in net interest margin (NIM) at 4.48 percent.

Other income was up by five percent to P1.28 billion, on the back of a 12 percent increase in service charges, fees, and commissions. 

The increase is attributable to a 59 percent surge in underwriting fees amounting to P143.27 million, representing 11 percent of total other income.

The bank also saw increases in trust, credit card, and trade finance fees.
Moreover, trading gains posted a recovery totaling P134.75 million from last year’s loss amounting to P0.47 million.

The bank has maintained a prudent approach by setting aside P199.50 million as additional provision for credit and impairment losses even as asset quality improves. The charge is 10 percent lower than last year.

As of Sept. 30, 2024, total assets amounted to P235.05 billion, translating to return on assets of 1.26 percent.

Total loans and receivables, accounting for more than 50 percent of total assets, expanded by 15 percent to P125.95 billion, driven by growth in all segments of lending. The steady growth in loans resulted in a loan-to-deposit ratio of 70 percent. 

Gross non-performing loans (NPL) and net NPL ratios were at 1.67 percent and 0.48 percent respectively, from 1.54 percent and 0.44 percent as of end-2023.

Financial assets at fair value summed up to P21.71 billion, almost 2x from the P11.44 billion year-on-year.

This is mainly attributable to capital appreciation and purchases made in anticipation of the lower interest rate regime. 

Investment securities, on the other hand, declined by 27 percent to P38.17 billion on account of maturities that were not re-invested in government securities and instead deployed as loans for better yield.

Total deposits rose moderately to P188.56 billion, one percent higher than last year. Broken down, total deposits comprise P164.39 billion current account savings account (CASA), P19.14 billion time deposits, and P5.03 billion long-term negotiable certificate of deposit (LTNCD).