BDO Unibank Inc. on Friday reported that net income edged up by a modest two percent to P20.1 billion in the first quarter, from P19.7 billion a year earlier, on sustained growth in core businesses even as it ramped up provisions amid rising geopolitical uncertainties.
In a statement, BDO said the first-quarter result was supported by sustained growth in lending, deposits, and fee-based businesses.
BDO Unibank President and CEO Nestor Tan attributed the steady growth to a “pricing issue or the rates.”
“If you look at the growth year on year, it's roughly the same. But we cannot control policy rates. And that drives yields on those,” he said.
While operational results were strong, with mid-teens growth in loans and pre-provision operating profit, BDO said “net income was tempered by higher provisions as the bank is building strong reserves, primarily a preemptive measure undertaken in response to evolving geopolitical risk conditions.”
The preemptive provisioning was for "certain accounts,” Tan said.
“We believe that the pressure though will be mostly on the consumer sector,” he added. “And right now, we haven't seen that yet in our portfolio or whatever we are encountering as losses is still par for the course.”
Gross customer loans rose 16 percent to P3.8 trillion, driven by double-digit growth across all market segments, and net interest income increased by 11 percent, supported by an expanded lending portfolio.
Deposits also grew by 15 percent, with current account and savings account deposits expanding by seven percent, providing a stable and relatively low-cost funding base.
Non-interest income went up by six percent while income from insurance operations surged by 27 percent, underscoring the bank’s diversified revenue streams.
“I'd like to give credit to our consumer banking people who have held steady in our underwriting standards,” Tan said.
BDO said that asset quality continued to improve, with its non-performing loan (NPL) ratio declining to 1.68 percent from 1.77 percent in the same period last year while NPL coverage stood at 132 percent, said to be among the highest in the industry.
Tan said their capital position remained robust, with the common equity tier 1 ratio at 13.3 percent, shareholders’ equity up by nine percent and book value per share increasing by eight percent to P119.36.
BDO shares on Friday slipped P2.70, or 2.29 percent, to close at P115.00 each amid a 0.67 percent drop for the benchmark Philippine Stock Exchange index.
