Saturday, August 09, 2008 Bank ‘disappointed’ with 1st sem results but maintains optimism
DESPITE present economic difficulties, the Bank of the Philippine Islands (BPI) remain optimistic about the future of the banking industry.
The BPI said its second quarter operating results were “significantly better” than the previous quarter. It said in a statement that its revenues improved in the second quarter of this year, pushing net income for the period to reach P2.3 billion against P1.15 billion in January to March.
BPI senior vice president and treasurer Atonio Paner said rising inflation makes it difficult for the bank to achieve its target revenue. But he said BPI is maintaining an optimistic outlook.
This optimism, he said, is brought about by the bank’s loan levels growing at 16 percent rising inflation. He added that the company will try to achieve a 10-percent growth in revenue for 2008.
However, BPI, in a statement furnished to Sun.Star Cebu, raised the need for continued prudence and vigilance in risk management.
In a squeeze
It admitted that “with margins under pressure and security trading income squeezed in a rising interest rate environment,” its net interest and non-interest income fell by six percent and 22 percent, respectively.
Although a four-percent drop in operating expenses cushioned the bank against the full effect of the decreased revenue, its net income for the first six months of the year was only P3.8 billion, 33 percent lower than the P5.7 billion recorded in the first semester of 2007.
“We are naturally disappointed that the first semester income was significantly lower than 2007. Like all Filipinos, the banking industry and BPI have not been spared from the effects of steeply rising inflation, and both interest margins and non-interest income had been squeezed,” said BPI president Aurelio R. Montinola III in a statement.
He said BPI expects the second half of this year to continue to be “challenging” due to high inflation, rising interest rates and peso-dollar exchange issues.
The Bangko Sentral ng Pilipinas (BSP) has—so far this year—twice increased its key interest rates to curb rising inflation.
The BSP raised its key rates by 25 basis points last June 5, the first time after three years; and by 50 basis points on July
17.
Paner, who was in Cebu City Thursday for a BPI-initiated economic briefing, said that despite BSP’s move, BPI can still assure its customers of low and competitive lending rates.
BPI’s advantage, he said, comes from the “low blended costs” of some of BPI’s core services, like the savings and current accounts.
BPI reported a growth of 22 percent in consumer loans while corporate loans went up between nine and 10 percent in the first semester of the year.
Its performance in the first semester of the year, in terms of remittances, grew 38 percent, stronger than the 22-percent growth in remittance volume in the first half of 2007.
Paner said BPI is number one in ranking in terms of remittances. To maintain its status, he revealed that the bank will continue to invest in expanding its international network to accommodate more remittance transfers.
He said BPI might also re-activate its New York branch and make it its flagship center in the United States.
“We will also focus on our SME (small and medium enterprises) portfolio,” Paner said, adding that the bank is open to more acquisitions should it see the opportunity to do so. (DME)
