BDO H1 net profit down 22% on lower trading gains

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BDO Unibank Inc. (BDO), the country’s largest bank, reported a double-digit drop in net profit in the first six months of the year in the absence of extraordinary trading gains that sharply boosted earnings in the comparative half of 2013.

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In a disclosure to the Philippine Stock Exchange, the Henry Sy-led BDO said its first half net profit slumped 22 percent to P11.05 billion from P14.1 billion in the same period of last year. Despite the sharp drop, the net income attained represents nearly half of BDO’s profit guidance of P22.8 billion for the full year. The bank said trading and foreign exchange gains in the period reached P4.2 billion, less than half the P8.8 billion recorded in the same period last year, although fee-based income increased to P8.3 billion from P7.6 billion previously.

Net interest income grew 24 percent to P24.7 billion from P20 billion last year on the back of a 21-percent surge in customer loans, which amounted to P975.1 billion from P806.6 million in the same period last year.

Deposits increased 35 percent to P1.37 trillion from P1.02 trillion in the comparable period last year.

Operating expenses amounted to P24.2 billion in the first half, while the pre-provision operating profit (PPOP) “remains solid” at P14.7 billion, BDO said.

The bank said it recorded a total capital adequacy ratio (CAR) of 14.5 percent, and common equity tier 1 (CET1) ratio of 13.1 percent under the current Basel III environment. These ratios are well above the regulatory minimum of 10 percent and 8.5 percent, respectively.

With a benign credit environment, the bank’s asset quality remains resilient with a non-performing loan (NPL) ratio at 1.6 percent from 2.4 percent last year while its current coverage ratio stands at 174 percent from 148 percent in the first six months of 2013.

Meanwhile, the bank said it opened 17 bank branches within the second quarter, bringing to 830 the total number of BDO branches as of midyear.

BDO also operates 2,300 ATMs nationwide, as well as a Hong Kong bank branch and 13 overseas remittance and representative offices in Asia, Europe, North America and the Middle East.

BDO said the branch expansion in the second quarter sustained its CASA (current account and savings account) growth and reduced its cost of funds.

Acquired by the SM Group in 1976, BDO was listed on the stock exchange in 2002. It is primarily engaged in corporate, commercial and retail banking services.

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