AYALA-LED Bank of the Philippine Islands’ (BPI) fund for loan losses soared to P4.23 billion in the first quarter of 2020 as the Covid-19 pandemic ushers in a difficult period for consumers and businesses that could lead to potentially higher non-performing loans.
That provision was more than doubled the P1.80 billion set aside during the same period in 2019. A loan loss provision is an expense set aside to allow for uncollected loans and loan payments.
“The Covid-19 outbreak has become the greatest challenge for the global and domestic economies. We are hopeful that for 2020, the expansionary monetary policy coupled with a more conducive investment climate will more than offset the expected slowdown in our country,” BPI chairman Jaime Augusto Zobel de Ayala said during the bank’s first virtual annual stockholders meeting Thursday, April 23, 2020.
BPI’s net income for the first three months of 2020 fell five percent to P6.39 billion from P6.72 billion in the same period last year.
Revenues, however, grew 10.9 percent to P25.26 billion. Net interest income rose 13 percent, reaching P18.14 billion.
BPI’s total loans as of end-March reached P1.45 trillion, up 7.3 percent, with growth recorded in microfinance (66 percent), small and medium enterprise (SME) at 14.2 percent, consumer (9.5 percent) and corporate loan segments at 6.7 percent.
Total deposits rose to P1.68 trillion, up 4.3 percent year-on-year.
Surge in digital transactions
Looking ahead, BPI president and chief executive officer (CEO) Cezar Consing noted that the Covid-19 crisis “will undoubtedly produce considerable stress” on all Filipino companies, especially the SMEs.
Consing reported the banking giant has gained “considerable traction” in its pivot to digitalization.
“Online transactions, which in 2019 were up by 50 percent, account for practically all of the growth in the bank’s transaction count. About 40 percent of the bank’s customers are now enrolled in one or more of our digital channels, with 25 percent of all customers regular digital transactions,” the CEO said.
Digital service fees now amount to P1 billion per year.
“The rate at which we are digitalizing will create about 20 percent additional capacity in our over 850 branches by the end of 2020,” Consing said.
The Ayala-led lender is also looking to further expand its microfinance business.
“We are focused on being a more financially inclusive bank. This is evident in the setting up of our microfinance and SME lending businesses,” he said.
Three years since its inception, BPI BanKo, its microfinance arm, is now the second largest microfinance bank in the country, with a loan portfolio of P4.3 billion, a growth of 100 percent in one year, a market share of 15 percent among microfinance and rural banks, a network of 300 branches, over 100,000 clients and total loan releases of P11 billion.