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THE Philippines’ two biggest banks said profits
last year were higher from a year ago.
In a report, Metropolitan Bank
and Trust Co. said it registered P5.523 billion in earnings last
year, a 27-percent jump from P4.36 billion in 2005.
Interest income, which includes
earnings from the bank’s lending business, reached P28.026
billion, while expenses incurred in servicing deposits among others
stood at P14.223 billion.
Separately, Bank of Philippine
Islands (BPI) said its net income rose 8 percent to P9 billion last
year from P8.4 billion in 2005. It missed its income target of a
10-percent growth last year.
The growth was attributed to an
increase in net interest income, noninterest income, overseas
remittance business, loan expansion and improvement in asset
quality.
Net interest income increased by
6 percent due to a P51-billion increase in average asset base. The
increase in volumes tempered the impact of a 17 basis points
reduction in net interest margin. The fall in spreads was consistent
with the overall decline in interest rates.
Noninterest income posted
stronger growth of 15 percent, contributing a bigger share to
revenue growth.
The bank’s overseas remittance
reached $2.5 billion at end-November, representing 22 percent of the
industry’s market.
Net loans expanded by 6 percent
to P243 billion, consisting of corporate and consumer loans.
The consumer loan portfolio
contributed the biggest share of the increase with its 11-percent
growth.
Mortgage lending grew by 16
percent due to recovery in the real-estate market and increased
cross-selling efforts to overseas Filipinos.
Asset quality further improved to
6 percent year on year from 6.8 percent previously.
BPI disposed of P9.5 billion in
bad assets last year.
Philippine banks are expected to
post modest incomes last year on the back of declining interest
rates, which put pressure on their trading gains.
With lending activity yet to pick
up to pre-crisis levels, banks have been trying to makeup for thin
loan volumes with trading gains.
Interest rates however have been
declining since last year, after the government managed to cut its
budget deficit to way below the ceiling, largely due to cuts in
spending after Congress failed to pass the 2006 budget.
Despite lower interest rates,
bank lending growth remains in the single-digit territory. After
rising to 11.1 percent last October, commercial bank loan growth
pulled back to a little over six percent a month later.
The modest growth in bank loans
likewise was in spite of improvements in lenders’ asset quality.
Banks have been disposing their non-performing loans after Congress
extended a law that offered perks for bad asset sales.
--Maricel E. Burgonio
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