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By Maricel E. Burgonio, Reporter
BANK of the Philippine Islands (BPI) on
Wednesday said its first-half profit fell as high inflation trimmed
the lender’s margins.
In a disclosure to the Philippine Stock
Exchange, the country’s second-largest lender said its net income
declined by 33 percent to P3.8 billion in the first six months of
the year from P5.7 billion in the same period last year.
The bank’s interest income dropped during the
period with margins under pressure and security trading income
squeezed amid a rising interest rate environment. Treasury gains
fell 38 percent.
Inflation during the period hit an average 7.6
percent, or way above the Bangko Sentral ng Pilipinas’ (BSP)
target of 3 percent to 5 percent. In June alone, price increases
accelerated to a 14-year high of 11.4 percent.
“We are naturally disappointed that the first
semester net income was significantly lower than 2007. The banking
industry and BPI had not been spared from the effects of steeply
rising inflation. [B]oth net interest margins and non-interest
income had been squeezed,” Aurelio Montinola, the president of the
Ayala-led lender, said.
In the second quarter, the bank’s earnings
reached P2.3 billion compared with the previous three-month
period’s P1.5 billion. Its operating expenses dropped by 4
percent, thus cushioning the full impact on revenues.
Montinola said the second half of the year would
likewise be challenging due to high inflation, rising interest
rates, and peso-dollar exchange concerns. The BSP earlier said
inflation would peak at 12 percent in October and end the year
within the range of 9 percent to 11 percent.
BPI’s resources inched up 5 percent year on
year to P626 billion in the first six months of the year. Its
non-performing loan ratio dropped to a 10-year low of 4.2 percent,
with total bad loans at P10.9 billion compared with P14.8 billion in
2006 and the P23.5 billion peak in 2001.
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