Bank of the Philippine Islands (BPI), the Ayala Group’s financial services arm, is confident of sustaining its record-breaking earnings streak for the rest of 2024, after registering all-time high profits for the full-year 2023 and first quarter of 2024.
In a press briefing after the bank’s annual stockholders’ meeting on Tuesday, April 23, BPI President and CEO Jose Teodoro K. Limcaoco said that “when you look at the first quarter results and we think about what the next nine months will be, we’re confident of a good strong year.”
This is despite the bank expecting the Bangko Sentral ng Pilipinas (BSP) keeping interest rates higher for longer “given the fact that inflation seems to be a little stubborn and growth in the US seems to be very strong and that the Fed is in no hurry to cut and, therefore there is really no impetus for the BSP to cut.”
He noted that BPI’s expected growth this year will be anchored on its retail and consumer businesses. “We’re making great strides on our consumer side. We can talk about retail loans and also on the mass consumer, which is personal loans and cards,” he also said.
Limcaoco added that the bank’s consumer business remains fairly resilient and “there's a lot of confidence."
"We're beginning to quickly see very strong growth along those segments. And for us, I think that's the reason why our income was quite healthy, was that we've been able to transform our book, to more towards what I would call the consumer side. If you look at where we were last year, last March, 78 percent of our book was institutional… the high end of the corporate book. Today, that's down to 74 percent,” he said.
Limcaoco also said that “I see the year, going forward, I'm quite optimistic. I think we're performing as a team very well. We are making inroads across all the initiatives we have.”
While the bank is taking more risks as it tries to expand its loan book, he stressed that “we take measured risks and we are willing to lend to more and more people which means we might have a little more defaults but not necessarily higher than what it was before.”
For this year, BPI Chief Finance Officer Eric M. Luchangco said they are looking at a growth in the low teens, 11 percent to 12 percent, for the bank’s total loan book.
The 172 year-old BPI reported a 25.8 percent growth in its first quarter net income to a record P15.3 billion this year, and equivalent to a return on equity of 15.7 percent and return on asset of 2.02 percent.
The bank attributed the solid performance to higher revenues, which more than offset the impact of higher operating expenses and provision for losses.
Total revenues for the quarter stood at P39.5 billion, up 24.6 percent from the same period last year. This was driven by a 23.5 percent increase in net interest income to P29.8 billion, on the back of an 18.5 percent increase in the average daily balance of loans, and a 25-basis point increase in net interest margin to 4.19 percent.
Non-interest income reached P9.7 billion, up 28.1 percent, driven by the underlying strength of the bank’s businesses led by insurance, credit cards and wealth management.
Strong loan and deposit growth remained evident even after removing the loans and deposits that were acquired from the merger with Robinsons Bank Corp.
Excluding the amount of loans and deposits brought in by Robinsons Bank on day one, loans grew 11.9 percent while deposits grew six percent.
All loan segments posted strong growth, led by Personal Loans, Microfinance and Business Bank/SME at 147.4 percent, 57.2 percent, and 45.8 percent, respectively.
Notwithstanding the strong loan growth, asset quality remained well-managed with the non-performing loan ratio at 2.12 percent and NPL cover at 136.20 percent.