BDO Unibank Inc. (BDO) posted P13.1 billion in net income in the first six months of 2018 on the back of solid results across its core lending and deposit-taking businesses, down from the year-ago level of P13.3 billion.
Excluding the impact of PFRS9, which was implemented early this year on the investment portfolio of BDO Life and the ongoing expansion of One Network Bank (ONB), net income would have increased by 13 percent.
Net interest income remained the major earnings driver, accelerating by 19 percent to almost P46 billion, driven by the hefty 20 percent jump in customer loans to P1.9 trillion on broad-based growth across all market segments.
Meanwhile, total deposits expanded by 17 percent to P2.3 trillion, supported by the 14 percent hike in low-cost CASA deposits, representing more than 70 per cent of total deposits.
Additionally, low-cost CASA funding combined with upward loan re-pricing due to rising interest rates resulted in net interest margins improving to 3.50 percent from 3.43 percent last year.
Non-interest income amounted to P22.8 billion, lower by two percent year-on-year, as the 23 percent growth in insurance premiums to P5.6 billion and the seven percent growth in fees and other income to P17.2 billion were offset by the unrealized mark-to-market losses on BDO Life's portfolio. Service charges and fees remained strong, but were tempered by weak underwriting and syndication activities in the capital markets. Overall, gross operating income grew by 11 percent to P68.8 billion.
Operating expenses were higher by 12 percent with the bank's continued expansion, with 45 new BDO branches opened, as well as higher documentary stamp taxes (DST).
Excluding the impact of higher DST, operating expenses would have risen by only 10 percent.
The bank remained prudent as it boosted provisions to P3.5 billion even as gross non-performing loan (NPL) ratio was lower year-on-year at 1.2 percent from 1.3 percent. NPL cover increased year-on-year to 158 percent from 137.2 percent.
Total capital grew to P303 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 Ratio at 14 percent and 12.4 percent, respectively.
Despite the challenging macro environment, BDO will continue to capitalize on its strong business franchise and extensive distribution network, generate quality earnings driven by recurring income sources, as well as execute its growth strategy to expand into high-growth areas and underserved segments. (PR)