BDO Unibank, Inc. (BDO) announced that it managed to post P12.3 billion in net income in the third quarter of 2020 despite the continuing impact of the pandemic.
Earnings for the first nine months of the year was at P16.6 billion, a 48-percent decline from the same period last year. This is due to upfront provisions booked in the second quarter of this year in anticipation of potential delinquencies due to the pandemic, the bank said.
Despite the promising results, BDO knows that the pandemic difficulties still lie ahead. The delinquency problem on loans have not yet peaked while interest rate caps on credit cards will be instituted soon and there are added costs in doing business as a result of necessary precautions inherent in its operations. All of these and more are seen to put pressure on BDO’s earnings.
Loans rose at a more tempered 6 percent to about P2.2 trillion, mainly driven by corporate and consumer accounts. BDO remained supportive of its borrowing clients by ensuring continued access to their credit facilities to help them manage their funding requirements during these challenging times, notwithstanding loan payment deferments under Bayanihan I and II.
Asset quality remained stable, with gross non-performing loans (NPL) ratio pegged at 1.97 per cent. Meanwhile, the NPL cover settled at 138 percent. Total provisions for 9M 2020 amounted to P23.8 billion, inclusive of the pre-emptive provisions in 2Q 2020.
Total deposits rose to P2.6 trillion, driven by the faster growth in Current Account/Savings Account (CASA) deposits, with almost all of BDO’s branches operational since 2Q 2020.The Bank’s CASA ratio climbed to a new high of 79 percent, while net interest income (NII) went up by 13 percent year-on-year to P99.8 billion.
Non-interest income settled at P36.8 billion, led by fee-based income and insurance premiums with P20.2 billion and P10.9 billion, respectively. Wealth management remained resilient with trust volume and fees sustaining steady growth despite soft market conditions. However, some of its businesses, specifically those that rely on face-to-face interaction, are still gradually rebuilding their volumes.
Operating expenses declined by 3 percent to P83.6 billion on lower volume-related expenses.
BDO’s balance sheet, however, remains solid with a capital base of P378.6 billion. Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio were at 14.3 per cent and 13.2 per cent, respectively, remaining well above regulatory minimum.
BDO believes that its strong business franchise and robust balance sheet place it in a good position to leverage on a post-pandemic economic recovery.