BDO Unibank, Inc. (BDO) reported at its stockholders meeting today its full year 2018 results, with net income hitting PhP32.7 billion, representing a 17% growth, and beating the PhP31 billion full-year guidance. The bank likewise capped another milestone as the first Philippine bank to surpass the P3 trillion mark in total assets.
The bank attributed its solid performance to strong recurring earnings from its core businesses, with sustained loan and deposit expansion on the bank’s continued branch build out in key growth areas and new markets, particularly the underserved sectors.
The Bank sustained its growth momentum through the first quarter of this year, with net income advancing to PhP9.8 billion. This achievement was due to the continued expansion of its core banking operations, recovery of trading gains to normal levels, and strong results from bank fees and life insurance premiums.
Net interest income was a major earnings driver, rising to PhP27.7 billion on the continued growth in customer loans and CASA expansion, resulting in higher net interest margins. Meanwhile, non-interest income went up to PhP14.9 billion, led by banking fees and insurance premiums. Trading and FX gains normalized to PhP2.2 billion from just PhP24 million a year-ago, given adverse market conditions during 1Q 2018 when the market declined by 7%. Excluding the increase in trading gains, core net income would have risen by 21%.
Operating expenses rose by 22% to PhP28.3 billion. Exclusive of policy reserves and volume-related expenses, Opex growth would have been 13% due primarily to continuing business and branch expansion as well as investments in IT upgrades implemented early this year. Meanwhile, the Bank set aside PhP1.3 billion in provisions, with gross non-performing loan (NPL) ratio steady at 1.2%, and NPL cover higher at 163% from 156 per cent in the 1Q 2018. Return on Common Equity (ROCE) however, stood at 11.8%, still below regional peers.
BDO’s capital base increased to PhP338.4 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) at 14% and 12.4%, respectively.