BDO sees 2016 net up 4% despite 11% fall in Q1

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SY-LED BDO Unibank Inc. yesterday said it expects earnings for the full year to hit P26 billion, up 4 percent from last year, on the back of a strong economy driven by cash remittances from overseas Filipinos and the robust business process outsourcing (BPO) sector.

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The bank remains positive on the economy even as it announced an 11-percent drop in net income in the first quarter, which it said was due to lower trading and foreign exchange gains amid less favorable market conditions.

At a press briefing on Friday, BDO president and chief executive officer Nestor Tan said BDO posted P5.5 billion in net income in the first quarter, as trading and foreign exchange gains declined 55 percent to P1.5 billion from P3.4 billion in the first quarter of last year.

But core lending, deposit-taking and fee-generating businesses delivered solid numbers, he said.

For full-year 2016, Tan said BDO has an earnings guidance of P26 billion as it expects treasury income to normalize amid its positive outlook for the economy.

“We expect the positive outlook to continue in 2016 although we are a little bit cautious,” he said.

Tan said the twin engines of the economy–overseas Filipino workers’ (OFWs) remittances and the BPO sector–continue to be strong.

“We also see growth in the provincial areas brought about by remittances. We see rapid urbanization outside the National Capital Region, and then there the country’s demographics,” he added.

For the first quarter, Tan said BDO’s net interest income grew 17 percent to P15.5 billion, supported by a 15 percent jump in customer loans to P1.3 trillion and a 14 percent growth in deposits to P1.7 trillion, driven by a 23 percent increase in low-cost deposits.

Fee-based income from payments, transaction banking and asset management services increased 11 percent to P4.8 billion.

The bank’s non-performing loan (NPL) ratio settled at 1.3 percent while NPL cover stood at 163 percent, with the bank setting aside P827 million in provisions for the quarter.

With a capital base of P204 billion, the bank’s capital adequacy ratio, tier 1 capital ratio and common equity tier 1 were at 13.4 percent, 11.8 percent and 11.4 percent, respectively, all above the current regulatory minimum levels under the Basel III framework.

 

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