Tuesday, October 28, 2008 Banco de Oro loses P1.3B
MANILA - The second largest bank in the Philippines, Banco de Oro, on Monday reported a P1.3-billion ($26.3-million) loss in the three months to September due to its exposure to collapsed US investment bank Lehman Brothers.
The loss was “caused primarily by the provisions set aside for the bank’s exposure to Lehman Brothers,” it told the Philippine Stock Exchange.
Its net profit for the nine months to September plunged to P1.06 billion compared to P4.88 billion a year earlier.
The lender said it has boosted provisions by 20 percent to P4.28 billion, “inclusive of extraordinary provisions for its exposure to Lehman Brothers.”
Banco de Oro said its core business “remained on track, with loans, deposits and service-based fee income continuing to show solid growth.”
It said its balance sheet also remained strong with total resources rising 23 percent to P743.49 billion.
Banco de Oro shares were down more than 18.6 percent to P22.5 at the close of gory trade at the Philippine Stock Exchange yesterday, which saw the main stock index plunge 12 percent, forcing a 15-minute trading halt.
“The declaration of bankruptcy by Lehman Brothers Holdings Inc. caused turbulence in the global financial markets, resulting in substantial markdowns in banks’ securities portfolios and the booking of extraordinary provisions for impaired assets,” the bank said in a statement sent to Sun.Star Cebu.
The Bangko Sentral ng Pilipinas has said the exposure of Philippine banks to Lehman Brothers and insurance giant American International Group—another casualty of the US sub-prime mortgage crisis—is less than one percent of the total resources of the Philippine banking system.
In its statement, BDO said its capital remained sizeable at P56.02 billion, “boosted by a P5 billion preferred share issue in September geared to augment the Bank’s Tier 1 capital and support business expansion.”
BDO’s capital adequacy ratio was 13.7 percent at the end of September. (AFP/with CTL)
