BDO’s profit fell 36% to P28.2 billion in 2020 on higher loan provisions

BDO Unibank Inc., the country’s largest lender controlled by the Sy family, said Wednesday net income declined 36 percent in 2020 to P28.2 billion from a record P44.2 billion in 2019, on higher pre-emptive provisions of P30.2 billion for potential delinquencies amid the COVID-19 pandemic.

The bank said in a statement it relied on strong and resilient business franchise and balance sheet to support core business operations, despite significant hurdles from the pandemic and ensuing economic lockdown.

Net interest income climbed 12 percent last year to P133.7 billion. Loans increased 3 percent to P2.3 trillion, driven by consumer and corporate accounts.

“The bank continued to assist its borrowing clients, ensuring their uninterrupted access to credit facilities, in addition to granting loan moratoria under Bayanihan I and II,” it said.

Current and savings account deposits rose 17 percent to P2.1 trillion, as clients were able to access BDO products and services through its branches, ATMs and digital channels even during quarantine restrictions.

Non-interest income declined 8 percent to P55.2 billion, supported by fee-based income, trading gains and insurance premiums.

“Business volumes were initially impacted by mobility restrictions, but have since begun to recover gradually. Wealth management, on the other hand, remained resilient with trust volumes and fees sustaining growth,” it said.

Trading gains increased as the bank capitalized on favorable market conditions, while insurance premiums grew modestly despite the initial impact of the lockdowns.

Operating expenses decreased 2 percent to P112.6 billion on reduction in marketing and volume-related expenses.

“The bank’s provisions of P30.2 billion were in line with prudent credit and provisioning policies, meant to further strengthen its balance sheet. The NPL [non-performing loan] ratio stood at 2.65 percent with NPL coverage at 109.5 percent,” it said.

BDO’s total loan loss reserves were equivalent to 3 percent of gross customer loans as of end-2020 and were considered more than sufficient to cover for potential losses.

Capital base expanded to P393 billion with its capital adequacy ratio and common equity tier 1 at 14.4 percent and 13.2 percent, respectively, above minimum regulatory levels.

Capital increased by 6 percent despite the pre-emptive provisions and the business impact of COVID- 19. Book value per share also increased 6 percent to P88.11 from P83.03 in 2019.

“BDO remains cautiously optimistic on a gradual upturn in 2021. With its extensive market reach and devoted workforce, the bank remains committed to providing banking products and services attuned to its customer's needs,” it said.