San Miguel Corporation (SMC) affiliate Bank of Commerce (BankCom) achieved a new milestone as its net income hit ₱3.02 billion for the first time, up eight percent from ₱2.8 billion in 2023.
The bank said achieving its higher profit since becoming an SMC affiliate shows BankCom’s strong commitment to performance, excellence, and continuously
improving customer service and reflects the dedication of its Board and management to becoming the top conglomerate bank in the country.
For the year 2024, the Bank registered a return on equity (ROE) of 9.44 percent, more than double the Bank’s initial public offering prospectus ROE of 4.22 percent.
The record high profit was backed by growth in its core business, primarily from the expansion in corporate loans and program lending mainly to SMC ecosystem clients.
The bank also recorded growth in fees and commissions, mainly driven by the investment banking, card, and trust businesses.
BankCom’s strong eight percent revenue growth to ₱10.76 billion last year from ₱9.98 billion in 2023 was due to higher net interest income and service charges, fees, and commission.
Net interest income reached ₱9.11 billion, 10 percent higher than the ₱8.30 billion in the previous year. The growth came from increased earning assets, mainly corporate and consumer loans, with a high focus on SMC ecosystem clients.
Net interest margin (NIM) registered 4.17 percent as the Bank aggressively priced loans to support its growth in earning assets.
Other income amounted to ₱1.65 billion, driven by the 21 percent expansion in service charges, fees, and commissions.
The improvement was propelled by an influx in underwriting fees amounting to ₱292.68 million, almost double the fees generated last year. The Bank also saw trust, credit card, and trade finance fees increase.
The bank has maintained a prudent approach to strengthening its balance sheet by setting aside ₱139.41 million as additional provision for credit and impairment losses, in line with its existing risk appetite.
Operating expenses, excluding provision for credit and impairment losses, grew eight percent to ₱6.67 billion versus ₱6.16 billion in 2023.
The increase in operating expenses was mainly due to the bank’s continued investment in human capital and technology and a higher volume of transactions.
Compensation posted ₱2.64 billion, up 17 percent year-on-year due to an increase in manpower count and an improved retention program.
Depreciation and amortization (IT related) amounted to ₱623.17 million, 27 percent higher than the ₱489.38 million last year due to its technology investments. Service fees and commissions registered ₱495.12 million and taxes and licenses of ₱1.09 billion both rose by 18 percent and three percent, respectively, due to higher business volume.
The bank’s strategy of improving its revenue streams and prudent spending resulted in a cost-to-income ratio of 62 percent.
Total loans and receivables, which represent more than 51 percent of the total assets, hit ₱136.51 billion, 25 percent up from last year.
The strong growth was driven by the expansion across all segments of lending. The uptrend in loans resulted in a loan-to-deposit ratio of 64 percent.
Gross non-performing loans (NPL) and net NPL ratios were at 1.25 percent and 0.49 percent respectively, from 1.54 percent and 0.44 percent as of end-2023.
Financial assets at fair value through profit or loss (FVPL) reached ₱2.88 billion, more than seven times from the ₱398.79 million last year. Similarly, financial assets at fair value through other comprehensive income (FVOCI) amounting to ₱19.08 billion, was almost double the ₱11.04 billion posted in 2023.
The upward trajectory in financial assets at fair value due to additional purchases. On the other hand, Investments Securities at Amortized Cost declined to ₱36.61 billion or 30.23 percent from ₱52.47 billion due to redeployment of matured government securities to loans.
Total deposits posted ₱212.01 billion, 14 percent up from last year. This is a milestone for breaching the ₱200 billion mark. The increase can be attributed to the success of the bank’s promotional strategies and the launch of various targeted marketing initiatives.