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Wednesday, June 3, 2020

BDO posts P8.8 billion net income in 1Q 2020

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BDO Unibank, Inc. (BDO) posted P8.8 billion in net income for the 1Q 2020 from P9.8 billion in the same period last year. The core lending and deposit-taking businesses sustained their growth despite the imposition of the Enhanced Community Quarantine (ECQ) in mid-March. However, weak capital market conditions impacted on BDO’s investment portfolio and dragged the bottom line.

Net Interest Income (NII) amounted to P33.0 billion, on stable margins. Customer loans went up by 11 per cent to P2.2 trillion on continued growth across all market segments, though the ECQ had started to disrupt the operations of borrowing clients classified as “non-essential”. Meanwhile, total deposits rose by nine (9) per cent to P2.6 trillion, even with scaled down branch operations in Metro-Manila and Luzon due to transportation and mobility restrictions arising from the ECQ.

Non-interest income amounted to P9.0 billion, largely contributed by fee-based income with P8.1 billion and insurance premiums with P3.9 billion. Weak capital market conditions resulted in unrealized mark-to-market (MTM) losses in BDO Life’s equities and unit-linked portfolios, leading to consolidated trading and forex losses. Gross operating income reached P42.0 billion vs. P42.6 billion in 1Q 2019.

Operating expenses were slightly lower at P26.8 billion from P28.3 billion in the comparative period last year largely due to reduction in volume-related expenses and lower policy reserves related to unit-linked funds.

The Bank maintained its conservative credit and provisioning policies, setting aside provisions of P2.3 billion, even as gross non-performing loan (NPL) ratio remained stable at 1.3 per cent and NPL cover still high at 151.4 per cent. To safeguard asset quality, the Bank has undertaken initiatives which include, among others, rapid portfolio reviews of clients and sectors highly affected by the impact of the ECQ, as well as reassessment of existing provisioning guidelines.

Total capital base increased to P372.2 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio at 13.8 per cent and 12.7 per cent, respectively, both comfortably above regulatory levels and deemed sufficient to withstand near-term shocks.

The Bank wishes to assure the public of its commitment to support its clients and to continue to service their requirements, while implementing measures to safeguard the health and safety of its customers and employees amid the COVID-19 situation and ECQ.

BDO believes that its strong business franchise and solid balance sheet make the Bank resilient in the face of the ongoing COVID-19 health crisis.

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