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With rising inflation pushing up interest rates, the Bank of the
Philippine Islands reported its profits for the first quarter fell
as interest and non-interest income contracted during the period.
The Ayala-led lender disclosed to the Philippine
Stock Exchange that net income from January to March plunged by 53
percent to P1.5 billion year on year despite trimming its operating
expenses by 6 percent. BPI blamed the climbing interest rates for
limiting its opportunities to generate securities gains.
“Domestically, inflationary pressures
escalated, thereby reversing the direction of the interest rate
movement. The bank responded by shortening duration of its peso
securities inventory to avert potential losses that may arise from
further rise in interest rate. This, however, resulted in lower peso
asset yields following the lower yields on replacement
securities,” the bank said.
This development brought down BPI’s total
revenues by 26 percent despite the P28-billion average asset base
growth. Non-interest income fell by 46 percent due to the absence of
the P416- million non-recurring gain from a property sale by its
insurance subsidiaries.
During the three-month period, BPI’s net loans
rose by 14 percent year on year and ahead of the industry’s
9-percent growth. These included loans to middle market, small and
medium scale enterprises (SMEs), and consumers, which grew by 18
percent, 18 percent and 21 percent, respectively.
The bank said housing loans remained to be a
major driver of consumer loan growth as new loans for the period
rose by 36 percent, pushing outstanding portfolio higher by 26
percent. Credit card billings also rose by 26 percent, while lending
to corporations was flat versus over a year ago, which “pulled
down the overall loan levels from end 2007,” BPI said.
At of end-March, BPI’s market capitalization
“remained the largest in the industry” at P136 billion as
against book value of P64 billion.
-- Likha C. Cuevas-Miel
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