BPI earnings jump 36% on growth in core lending, deposit businesses
AYALA-LED Bank of the Philippine Islands (BPI) saw its net income climb by more than a third in the first quarter on the back of better performance of its core businesses.
The country's third largest bank in asset terms posted a PhP4.9- billion net earnings in the January to March period, up to 36% from the same period last year, boosted by the "marked improvements" of both its interest and non-interest income, it said in a disclosure to the local bourse yesterday.
BPI's net interest income grew by 15% to PhP9.43 billion on account of a 15% expansion in average asset base and a slight improvement in spreads.
Meanwhile, its non-interest income increased 23% to PhP5.13 billion, mainly due to "notable increases" in income from the bank's insurance business, branch-based fees, and securities trading.
Growth in the Ayala-led bank's operating expenses was maintained at 8.8%, driven by manpower related and regulatory costs. Its cost-to-income ratio improved to 50.3% from last year's 54.4% during the same period.
BPI's core lending an deposit businesses also sustained strong growth in the first quarter.
The bank's net loans stood at PhP730 billion, up 14% year-on-year as lending to corporates also increased by 13%. Retail loans also expanded by 16%, while total deposits in the first three months of 2015 was at PhP1.159 trillion, posting a 17% increase from the same period in 2014.
The bank said its net earnings translated to a 13.8% return on equity, or the net income earned as a percentage of stockholder investment - a key measure of performance, while return on assets, or the net income as a percentage of total assets, was at 1.5%
Despite the growth of its lending business, BPI said it was able to maintain its asset quality,
The bank's net non-performing loan (NPL) ration improved to 1.7% from 1.89% while its NPL coverage ratio stood at 111.7% NPLs are obligations that remained unpaid for at least 30 days after their due date.
BPI's capital base as of end-March stood at PhP145.6 billion, after the settlement of the PhP3.5 billion dividends for the second quarter of 2014 last March 17, while its total capital adequacy ratio - a measure of a bank's financial strength - stood at 15.67%, still above the central bank's 10% minimum requirement, while its common equity Tier 1 (CET1) ratio of 14.81% also exceeded the minimum CET1 ratio of 8.5%.
"We are pleased with our first quarter results. We begin the year with strong momentum, and are focused on growing our core lending and fee businesses, while maintaining cost efficiency," BPI President and Chief Executive Officer Cezar P. Consing was quoted as saying.
BPI saw its net income dip to PhP18.038 billion in 2014, down 4% from the PhP18.811 billion it booked at end-2013 in the absence of trading gains, although its lending business surged last year.
Mr. Consing earlier said the bank expects better performance this year as it sees its core businesses expanding further and as BPI's current performance is "still on track with [the bank's] aspirations."
BPI Family Savings Bank President Natividad N. Alejo also said BPI wants to exceed last year's loan growth of 27%.
Moving forward, BPI said it plans to open up to 40 branches starting this year, mostly in outside Metro Manila area in its bid to grow its network and expand its market reach in provincial areas. BPI has 810 branches currently.
Shares in the lender closed at PhP101.00 each on Tuesday, down 50 centavos or 0.49% from the previous day's price of PhP101.50 apiece. - Imee Charlee C. Delavin