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September 26, 2022

Despite 28% rise in provision for bad debts, BDO Q1 profit up 13% to P11.7B

BDO Unibank Inc. headed by bankero Nestor Tan booked a 13 percent increase in earnings to P11.7 billion from January to March this year compared to P10.4 billion in the same period last year despite the 28 percent jump in provision for credit losses.

“BDO’s sustained earnings performance, robust business franchise, and solid capital base place the Bank in a good position for long-term sustainable growth,” the Sy-led bank said in a statement.

The bank owned by the family of the late taipan Henry Sy maintained its conservative credit and provisioning policy with provisions at P3.7 billion in the first quarter of the year, 27.6 percent higher than last year’s P2.9 billion.

This translated to a three percent increase in BDO’s operating expenses to P31.8 billion as of end March this year.

The additional provisioning translated to a higher non-performing loan (NPL) coverage ratio of 120.8 percent despite the improvement in the NPL ratio to 2.72 percent from 2.81 percent as asset quality improves with economic reopening and greater mobility.

BDO’s loan portfolio rose by seven percent to P2.4 trillion on strong demand from corporate borrowers, the recovery in the middle market, and the resilience of the consumer segment.

Deposits went up to P2.8 trillion driven by the 11 percent year-on-year increase in Current Account/Savings Account (CASA) deposits that now account for 86 percent.

This resulted in a six percent increase in net interest income to P33.9 billion, while non-interest income grew by nine percent to P16.7 billion, driven by fees and insurance premiums.

The total capital base of the Sy-led bank strengthened to P429.9 billion, with the Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) Ratio both increasing to 14.6% and 13.5%, respectively, comfortably above regulatory minimum.

BDO’s Return on Common Equity (ROCE) increased to 11.09 percent from 10.56 percent, while its book value per common share rose by seven percent to P96.47.

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