BDO Unibank Inc. (BDO) announced that it has set aside an additional P20 billion in upfront provisions, on top of the P2.1 billion set aside in the first quarter of 2020, in anticipation of the expected disruptive economic impact of the Covid-19 pandemic and the enhanced community quarantine.
The bank is expecting delinquencies to increase this year with the disruption in business activities, tightness in corporate liquidity, lower consumption levels and contraction in gross domestic product by as much as 3.4 percent based on government estimates.
As such, the bank is allocating a total of 170bps in anticipated credit costs for the effects of the pandemic.
While the bank expects an increase in the non-performing loan (NPL) ratio, actual write-offs or losses are seen to be much less.
Despite the additional provisions, the bank’s capital adequacy ratio is expected to remain stable and the bank intends to continue with its regular dividend declaration. (PR)