July 21, 2022

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BPI Q2 net income almost doubles after asset sale

BANK of the Philippine Islands (BPI) posted a higher net profit in the second quarter and the first half, driven by a net gain on an asset sale and tax adjustments, improved revenues and lower provisions for bad loans.

BPI’s net income rose by 82.9% to P12.5 billion in the quarter ended June 30 from the P6.8 billion recorded in the same period last year, the bank said in a disclosure to the stock exchange on Thursday. Excluding the impact of the asset sale, the lender’s net income in the quarter was at P8.7 billion.

This brought the lender’s net earnings for the first half of the year to P20.4 billion, up by 73% from the P11.75 billion seen in the same period in 2021.

Excluding the impact of the asset sale and tax adjustments, BPI’s net income stood at P16.7 billion in the first semester, up by 24% year on year.

“This result is inclusive of a net gain on sale of property and tax adjustments due to the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Law,” the bank said.

The lender’s end-June net income translated to a return on equity of 13.98%, while return on assets was at 1.71%.

BPI’s revenues in the second quarter went up by 35.6% to P32.3 billion for the quarter amid higher net interest and non-interest earnings. Without the proceeds from the asset sale, revenues were at P27.3 billion in the period.

This caused revenues in the first half to climb by 19.8% to P57.6 billion.

Net interest income grew by 16.2% to P39.3 billion in the first half as net interest margin rose by 15 basis points to 3.46% from 3.32% on the back of a growth in loans.

Non-interest income also climbed by 28.4% to P18.3 billion in the semester, which the bank attributed to a 42.2% increase in fee income. This was tempered by “notably lower” securities trading gains due to a high base.

The bank’s total operating expenses in the first semester rose by 7.3% to P25.8 billion from a year earlier amid increased investments in technology. Its cost-to-income ratio stood at 44.8%.

Excluding income from asset sales, its cost-to-income ratio was at 49.1%.

BPI’s loan portfolio grew by 14.4% to P1.6 trillion as of June due to higher volumes across the board, led by the corporate (up 16.3%), small and medium enterprises (16.5%), and auto (5.9%) sectors.

Its nonperforming loan (NPL) ratio stood at 1.99% at end-June, down from the 2.94% seen a year earlier. NPL coverage ratio was at 170.7%.

With asset quality improving, the bank’s provisions for credit losses declined by 23.1% to P5 billion at end-June from P6.5 billion last year.

“The sustained strong metrics in asset quality resulted in a continued decline in credit cost to 66 basis points, towards pre-pandemic levels,” the bank said.

Meanwhile, deposits with the bank grew by 18.3% year on year to P2 trillion. BPI’s current account, savings account (CASA) deposits increased by 12.6% for a CASA ratio of 79.2%.

The bank’s loan-to-deposit ratio was at 78.1%.

“Both loan and deposit volumes remain above pre-pandemic levels,” BPI said.

The bank’s assets climbed by 13.1% to P2.5 trillion at end-June, while total equity was at P304.1 billion.

Its common equity Tier 1 ratio stood at 16% and its capital adequacy ratio was at 16.9%, both beyond the central bank’s minimum requirement.

BPI’s shares closed unchanged at P89 apiece on Thursday. — K.B. Ta-asan