1Q19 Core Earnings up 21%
BDO Unibank, Inc. (BDO) reported at its stockholders meeting today its full year 2018 results, with net income hitting P32.7 billion, representing a 17 per cent growth, and beating the P31.0 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 P9.8 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 P27.7 billion on the continued growth in customer loans and CASA expansion, resulting in higher net interest margins. Meanwhile, non-interest income went up to P14.9 billion, led by banking fees and insurance premiums. Trading and FX gains normalized to P2.2 billion from just P24 million a year-ago, given adverse market conditions during 1Q 2018 when the market declined by 7 per cent. Excluding the increase in trading gains, core net income would have risen by 21 per cent.
Operating expenses rose by 22 per cent to P28.3 billion. Exclusive of policy reserves and volume-related expenses, Opex growth would have been 13 per cent due primarily to continuing business and branch expansion as well as investments in IT upgrades implemented early this year. Meanwhile, the Bank set aside P1.3 billion in provisions, with gross non-performing loan (NPL) ratio steady at 1.2 per cent, and NPL cover higher at 163 per cent from 156 per cent in the 1Q 2018. Return on Common Equity (ROCE) however, stood at 11.8%, still below regional peers.
The Bank’s capital base increased to P338.4 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) at 14.0 per cent and 12.4 per cent, respectively.
BDO set its earnings guidance at P38.5 billion for the full-year 2019, as the Bank leverages on its strong business franchise and extensive distribution network while executing its strategy to expand across high-growth areas and underserved segments.