Bank of the Philippine Islands, the third-largest lender in terms of assets, said net income in the first half fell 5.7 percent to P11.03 billion from a year ago, on lower trading gains and higher expenses for digital technologies.
BPI said in a statement total revenues hit P37.22 billion, as net interest income grew 11.5 percent to P26.21 billion. Asset base expanded 9.3 percent, while the net interest margin improved 8 basis points.
The bank said interest income from loans grew 21.1 percent year-on-year, led by a 16-basis-point improvement in loan yields. Cost of funds increased 17 basis points in the six-month period, on higher documentary stamp tax on deposits.
It said net interest margin expanded 15 basis points on a quarter-on-quarter basis, amid favorable loan repricing and liquidity provided by the proceeds from the recent stock rights offering which allowed for the paydown of more expensive time deposits.
Net interest margin increased from 2.91 percent in the first quarter to 3.06 percent in the second quarter.
Total loans reached P1.22 trillion, up 15.7 percent year-on-year, on the back of strong growth in corporate loans and credit cards at 17.1 percent and 22.7 percent, respectively.
Total deposits went up 7.5 percent to P1.53 trillion, with current and savings accounts registering faster growth of 10 percent. The bank’s Casa ratio stood at 75.3 percent, while the loan-to-deposit ratio was at 79.7 percent.
“Lower income from securities trading, trust and investment management and assets sales contributed to a 6.9-percent year-on-year decline in total non-interest income from P11.82 billion in the first semester 2017 to P11.01 billion in the first semester 2018,” BPI said.
The bank registered higher revenues from credit card fees and rental income.
Provision for loan losses in the first semester 2018 amounted to P1.91 billion, or 22.2 percent lower than 2017’s first half. Julito G. Rada
“The lower provisioning level is based on the bank’s expected credit loss models under PFRS9 [Philippine Financial Reporting Standard 9] which showed relatively benign increases in potential impairment losses,” it said.
Non-performing loans ratio increased slightly from 1.72 percent in March to 1.80 percent in June, with a reserve cover ratio of 97.1 percent at the end of the first semester.
Operating expenses surged 16.3 percent to P21.22 billion, on accelerated spending on manpower, premises, and technology.
This is to support the bank’s continued implementation of its digitalization strategy and its commitment to serve the self-employed micro-entrepreneurs by expanding the network of BPI Direct BanKo branches.