BDO Unibank, Inc. (BDO) earnings for the first nine months of 2019 was a record-breaking P32.4B surpassing last year's P21.5B for the same period. The increase in net income was greatly boosted by the expansion in the recurring core revenues of the bank. The 9M19 net income translates to a Return on Common Equity (ROCE) of 12.5 per cent, compared to 9.5 per cent in 9M18.
In terms of customer loans, there was an increase by six (6) per cent year-on-year (yoy) to P2.1 trillion, led by the sustained growth in the middle-market and consumer segments. Meanwhile, total deposits went up by three (3) per cent yoy to P2.4 trillion, with low-cost Current Account/Savings Account (CASA) deposits increasing by six (6) per cent and accounting for 72 per cent of total deposits.
Net Interest Income (NII) increased yoy to P88.5 billion, with net interest margins (NIMs) further improving in 3Q19.
Non-interest Income went up yoy to P44.1 billion, led by fee-based income and insurance premiums which accelerated by 14 per cent and 23 per cent to P25.4 billion and P10.8 billion, respectively. Trading and foreign exchange gains in 3Q19 amounted to P690 million from P1.0 billion year-ago. However, the trading and forex gains of P4.3 billion for the nine-month period reflects a normalized level compared to 2018, where a more volatile environment prevailed. As such, gross operating income rose to P132.6 billion.
Operating expenses rose by 20 per cent to P85.8 billion given the Bank’s continuing expansion as well as increased volume-related expenses (e.g., taxes and licenses and policy reserves at BDO Life were up by an aggregate 42 per cent yoy). Excluding volume-related expenses, operating expenses would have risen by 14 per cent.
Provisions amounted to P4.2 billion as the Bank maintained its conservative credit and provisioning policies. Gross non-performing loan (NPL) ratio was steady at 1.2 per cent, while NPL cover remained high at 168.2 per cent.
The Bank’s capital base increased to P364.0 billion, with Common Equity Tier 1 (CET1) and Capital Adequacy Ratio (CAR) improving to 13.1 per cent and 14.6 per cent, and remaining comfortably above the current regulatory minimum under the Basel III framework.
With BDO's focused growth strategy, strong business franchise, solid balance sheet and extensive geographic reach, the Bank remains solidly positioned to capitalize on the country’s solid economic pace and growth opportunities in underserved and emerging markets.