Zobel-led Bank of the Philippine Islands (BPI) reported flat first-half earnings as an aggressive ramp-up in provisions for bad loans offset double-digit gains in core interest and fee revenues.

In a disclosure to the Philippine Stock Exchange, the country’s oldest lender reported that net income dipped 0.4 percent to ₱32.8 billion in the first six months of 2026 compared with ₱33.0 billion in the same period last year.

While underlying revenue momentum remained strong, bottom-line growth was capped by rising credit protection and elevated operating costs.

BPI boosted its provisions by 84 percent year-on-year to ₱13.3 billion, citing expected credit losses tied to deteriorating macroeconomic conditions. Despite the pre-emptive shield, BPI's asset quality held firm, with the non-performing loan ratio remaining flat quarter-on-quarter at 2.42 percent.

BPI's NPL coverage ratio expanded to 92.98 percent, reinforcing its cushion against potential defaults.

Total revenues for the first half climbed 12.4 percent to ₱104.0 billion. Net interest income, the primary driver, rose 12.5 percent on the back of an 11.3 percent expansion in the lender's average earning asset base. Net interest margin widened by 5 basis points to 4.63 percent.

Non-interest income also showed strength, rising 12.1 percent to ₱24.0 billion. The increase was propelled by an 18 percent jump in fee revenues, buoyed by higher transaction volumes across credit cards, investment banking, insurance, and wealth management.

However, BPI’s revenue expansion was met with higher costs. Operating expenses grew 13.8 percent to ₱48.6 billion, driven by investments in technology, personnel, and volume-driven business costs. That pushed BPI’s cost-to-income ratio to 46.8 percent. For the period, the bank posted a return on equity of 13.8 percent and a return on assets of 1.8 percent.

BPI’s balance sheet showed ongoing expansion, with total assets rising 9.6 percent to ₱3.7 trillion. Total loans grew 12.4 percent to ₱2.7 trillion, led by consumer and smaller business segments. While institutional loans rose 8.7 percent, non-institutional lending jumped 21.2 percent, powered by a 74.5 percent surge in SME loans, a 28.9 percent increase in credit cards, and a 21.4 percent rise in personal loans.

Deposits tracked the asset expansion, growing 9.2 percent to ₱2.8 trillion, which kept the bank's loan-to-deposit ratio at 93.6 percent. Total equity reached ₱482.6 billion, up 6.4 percent, leaving BPI with a Common Equity Tier 1 ratio of 14.0 percent and a capital adequacy ratio of 14.8 percent—both comfortably ahead of regulatory minimums.

During the second quarter, BPI sought to drive transaction volumes by becoming the first local lender to permanently waive both InstaPay and PESONet fees for personal interbank transfers.

It also expanded its retail investing options through BPI Wealth, launching local currency classes for its global tech and equity feeder funds. The bank distributed a cash dividend of ₱2.58 per share in June, representing a 24 percent increase year-on-year. (James A. Loyola)