Wednesday, 29 July 2009

Philippines' Banco de Oro 2nd-quarter profit up 9%

Erik de la Cruz
Business Mirror
http://www.businessmirror.com.ph/home/banking-a-finance/13791-bdos-2nd-quarter-profit-up-9.html

BANCO de Oro Unibank (BDO), the country’s largest bank, posted a 9-percent increase in net income for the second quarter to P1.1 billion on higher interest and fee-based income and improved trading gains.

The bank of retail magnate Henry Sy on Tuesday said its quarterly earnings rose from P1 billion in the same period last year and were up 11 percent compared with the previous quarter.

 “Sustaining earlier gains, the bank’s loans, deposits, net interest income and fee-based income continued to grow. Income from trading activities also improved with a more stable financial environment,” BDO said in a statement.

For the first half of the year, the bank’s net income was down 10 percent at P2.1 billion. Although first-quarter earnings hit P1 billion, the figure was 25-percent lower compared with the year-ago bottom line which was boosted by one-off gains.

But the first-half net income on a recurring basis was 62-percent higher.

In June, BDO chairperson Tessie Sy-Coson said the bank was keeping its full-year profit guidance of P5.5 billion intact despite a much weaker-than-expected economic growth of 0.4 percent in the first quarter, which prompted the government and many economists to scale down growth projections this year.

The bank said broad-based demand for loans resulted in a 28-percent increase in gross customer loans to P414.4 billion by the end of June. Deposits, meanwhile, increased 26 percent to P627.1 billion with low-cost deposits on the rise and some branches having been relocated to “high-growth” areas.

 Net interest income for the six-month period rose 32 percent to P14.3 billion given an expanded loan portfolio and an “improved funding mix,” the bank said.

Fee-based income went up 11 percent to P4.5 billion on higher contributions from fund management, remittance, credit card, cash management, investment banking and bancassurance services.

 Trading and foreign-exchange gains improved 46 percent to P1.9 billion amid a “more stable” financial market.

The bank, however, maintained a conservative stance amid a weak economy, boosting provisions for probable losses on loans by 64 percent to P2.5 billion.

In June, BDO president Nestor Tan said the bank was looking at booking P5.26 billion in provisions for probable loan losses this year, a slightly bigger amount compared with last year’s total provisions of P5.23 billion.

Based on the guidance announced in June, the bank was confident that net income this year would rise by 172 percent from P2.18 billion in 2008, with gross loans seen increasing by 15 percent to P451.1 billion and investment assets by 25 percent to P460.5 billion.

The bank had also projected a 19-percent expansion in its asset base to P950.8 billion by the end of 2009.

Bank officials had not ruled out further acquisitions after recently signing an agreement to acquire GE Money Bank from GE Capital, the financial-services unit of New York-listed General Electric Co.

The acquisition was expected to bring into BDO’s network an additional 31 branches, assets of P10 billion, deposits of P8.4 billion and loan accounts of P6 billion. Under the agreement, GE Capital would acquire a 1.5-percent stake in BDO as payment and was given an option—exercisable within six months—to further increase its stake to 10 percent.

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