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Philippines: BPI profits up 28.8% on lower loan loss buffers
MANILA, Philippines — Ayala-led Bank of the Philippine Islands saw its earnings grow by over a fifth in the second quarter, after the lender funneled less resources on buffers against bad loans from pandemic-hit borrowers.
The 169-year-old bank posted a net income of P6.8 billion in the April-June period, up 28.8% year-on-year, the company told the stock exchange on Thursday. Quarter-on-quarter, net income surged 36.3%.
It was BPI’s largest quarterly profit since the start of the pandemic, bringing the six-month bottom line to P11.8 billion, up by measly 1.2% annually. Broken down, BPI’s total revenues for the first six months fell 6.7% on-year to P48.1 billion, as net interest income and non-interest income dropped an annualized 6.6% and 7.1%, respectively.
Total operating expenses, meanwhile, inched up 3.0% on-year to P24.1 billion. In a statement, BPI said it managed to avert a drop in earnings because of “lower provisions recognized.”
Financial results showed BPI set aside P6.5 billion in the first half of the year to protect its balance sheet from a slew of soured loans from pandemic-battered borrowers. That was 55% lower than the amount the company segregated a year ago.
In the first six months of the year, non-performing loans, or debts that remain unsettled 30 days past due, ate up 2.94% of BPI’s total loan portfolio. But despite the lower loan loss provisions, the bank’s NPL coverage ratio stood at 120.3%, well-above industry levels.
As it is, BPI is still not out of the coronavirus storm yet. From January to June, total loans amounted to P1.4 trillion, down 4.5% year-on-year due to “softer demand in corporate, SME, and auto loans.”
Total deposits, considered a lifeline for banks, sagged 4.5% annually, with jobless people dipping into their savings to survive hard times.
As of 10:49 a.m. on Thursday, shares in BPI were trading up 1.66%, tracking an uptrend in the main index.
Source: https://www.philstar.com/business/2021/07/22/2114302/bpi-profits-288-lower-loan-loss-buffers