AYALA-LED Bank of the Philippine Islands (BPI) remains largely insulated from direct exposure to the Middle East conflict but is closely monitoring risks to inflation, oil prices and consumer spending as global tensions persist.
“The conflict in the Middle East is complex and volatile,” BPI Chairman Jaime Augusto Zobel de Ayala said on Monday during a stockholders’ meeting.
“We are therefore closely monitoring ongoing developments and assessing what these could mean for the Philippine economy and, of course, in turn, for BPI,” he added.
Higher oil prices remain a key risk transmission channel, Zobel de Ayala said.
“The conflict has already contributed to higher oil prices, as you have probably seen, and experts warn that prolonged tensions could drive prices even higher,” he said.
Zobel de Ayala added that overseas Filipino workers in the Middle East could also be indirectly affected through employment and remittance flows.
“We are also monitoring the situation of overseas Filipinos in the region as both inflationary pressures and disruptions to employment could weigh on household consumption, which is a key driver of the Philippine economy,” he said.
Despite these risks, he stressed that BPI remained financially sound.
“We remain well-capitalized and highly liquid, with strong risk management practices in place,” he said, noting that the bank’s exposure to the region was limited and its loan book diversified.
BPI President and CEO Jose Teodoro Limcaoco, meanwhile, said in a media briefing that the broader economic impact of sustained fuel price increases could weigh on consumption, the economy’s main growth driver.
“Clearly, we all know the Philippine economy is driven by consumption,” he said.
“With this Middle East crisis, this war has caused fuel prices to rise initially ... but continuing high prices will obviously cut into the ability of consumers to spend.”
He warned that households may be forced to shift spending toward essentials.
“People will have to reallocate spending away from discretionary into more basic things such as transportation,” he said.
Limcaoco also flagged second-round effects on inflation, while on policy response, he said the bank may tighten credit standards if risks intensify.
“If we believe that, then we have to be a little more cautious ... by maybe tightening credit standards and upping our collection efforts,” he said.
Strong Q1 performance
Despite the external headwinds, BPI reported a solid first-quarter (Q1) performance, posting a net income of P16.9 billion in the period, up 1.7 percent year on year, on sustained loan expansion, wider net interest margins and stronger fee-based income.
Total revenues rose 13.9 percent year on year to P50.9 billion, supported by a 13.7-percent increase in net interest income as earning assets expanded and margins improved.
Noninterest income also expanded on higher credit card fees, foreign exchange gains and trading income.
Operating expenses rose 15.8 percent to P23.5 billion due to higher technology and manpower costs, while provisions stood at P5.5 billion.
BPI said asset quality remained stable, with its loan portfolio continuing to expand across consumer and institutional segments.
The bank ended the quarter with a return on equity of 14.3 percent and return on assets of 1.9 percent, underscoring sustained profitability despite global uncertainties.
BPI shares on Monday dropped P0.60, or 0.60 percent, to close at P98.60 each.
