BDO Unibank Inc., the biggest lender in terms of assets, said net income in the first half declined 1.5 percent to P13.1 billion from P13.3 billion a year ago.
The bank said in a disclosure to the stock exchange Friday excluding the impact of Philippine Financial Reporting Standard-9, which was implemented early this year on the investment portfolio of BDO Life and the ongoing expansion of One Network Bank, net income would have increased 13 percent.
PFRS-9—the local equivalent of IFRS-9—took effect at the start of 2018. It requires banks to assess all future asset impairments by using expected loss models as opposed to the previous as-incurred approach.
“Net interest income remained the major earnings driver, accelerating by 19 percent to almost P46.0 billion, driven by the hefty 20-percent jump in customer loans to P1.9 trillion on broad-based growth across all market segments,” the bank said a statement.
Meanwhile, total deposits expanded 17 percent to P2.3 trillion, supported by the 14-percent hike in low-cost CASA deposits, representing more than 70 percent 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 7-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. Gross operating income rose 11 percent to P68.8 billion.
Operating expenses were higher by 12 percent with the opening of 45 new BDO branches and higher documentary stamp taxes. Excluding the impact of higher DST, operating expenses would have risen by just 10 percent.
The bank remained prudent as it boosted provisions to P3.5 billion even as gross nonperforming loan 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.