Growth slowed by ‘difficult market conditions’
State-run Development Bank of the Philippines (DBP) recorded P4.7 billion in net income last year, only slightly higher than the P4.6 billion profit booked in 2014.
In a statement, DBP said growth could have been faster, but that 2015 net income nevertheless “increased to P4.7 billion despite the difficult market conditions.”
The state-owned bank said its revenues rose by P1.9 billion to more than P21.5 billion, driven by interest on loans from its core lending business, characterizing this as a sustained source of earnings despite market volatilities.
DBP achieved its total assets target of P500 billion, recording a total of P504 billion last year on the back of loans growth.
Total deposits grew by 10.4 percent in 2015, while its checking and savings accounts (CASA) also posted double digit growth of 12.2 percent to P104 billion.
At present, DBP said it is in the middle of a “transformation” after being involved in a ‘wash sale’ scandal that involved 28 illegal bond-trading transactions of 20- and 25-year fixed rate treasury notes between January and March 2014. Reports said the bank incurred P717 million in losses from the illegal transactions, which dragged 2014 net income to P4.6 billion from P5.6 billion in 2013.
“DBP has undergone transformation: from a bank that was heavily dependent on profits from Treasury trading, to one with robust sources of recurring income. We have re-focused our bank back to its core business of financing and lending to our core sectors, in the process, we have re-directed our bank back to its developmental mandates,” the bank said in a statement.
“It is a more difficult and riskier strategy to execute; it would have been easier to continue to generate profits from just doing more deals and trades, but we nevertheless went ahead with this new strategy because it is the right thing to do,” it added.
The state-run bank is also heavily investing in new computer systems that include a core banking system, an all-new cash management system, and transactional banking platform.
DBP said these investments in computer systems is “all at great cost at the expense of our profits…because it is the right thing to do: investing in the future of our bank.”
“We could have chosen to do nothing and let the next leadership worry and implement all these changes, not to ‘rock the boat’ or ‘raise controversy’ – but we ‘bit the bullet,’ so to speak, and gone ahead, again, because it is the right thing to do,” the bank said.
DBP President Gil Buenaventura recently told reporters that the bank targets “slightly over P4.7 billion” net income this year on the back of the same growth drivers.
“This year, [it is]slightly over P4.7 billion. We budgeted P5 billion per year; growth drivers are still the same,” Buenaventura said.