Tuesday, 2 March 2010

BDO beats guidance as ’09 income hits P6.1 billion

Erik de la Cruz
Business Mirror

TYCOON Henry Sy’s Banco de Oro Unibank Inc. (BDO) posted an unaudited net income of P6.1 billion for 2009, beating its guidance of P5.5 billion, and on Monday said it was looking to further fortify its dominant position in the local industry by raising additional capital.

BDO—the country’s biggest bank in terms of assets, loans, deposits and trust assets under management—said its bottom line in the past year represents an increase of 173 percent over the 2008 figure.

The higher profit reflects the “robust” growth in operating income and a slower increase in operating costs, it said.

“Our capital-raising is intended to support our continued growth,” said BDO chief executive Nestor Tan in a text message to the BusinessMirror. “The amount and form are yet to be finalized.”

The bank ended 2009 with total assets of P856.2 billion, representing a 6-percent increase from a year earlier and 14.6 percent of the local industry’s total assets.

It was also No. 1 in net loans and receivables, which rose 6.6 percent to P491.8 billion, accounting for 17.1 percent of the market.

Its deposit base expanded 9.2 percent to P692.7 billion, grabbing a 15.8-percent share of the market.

“For this year, the bank hopes to do well by leveraging on its operating scale and maintaining good growth in its core businesses amid a more favorable operating environment,” BDO said in a statement.

“In this light, the bank is considering plans to raise fresh capital to support its medium-term growth objectives and further reinforce its position in the industry.”

In an interview with reporters in January, BDO chairman Teresita Sy-Coson said the bank was looking at raising both Tier 1 (core) and Tier 2 (supplementary) capital this year.

The bank had previously considered selling new shares through a rights offering to existing shareholders in 2009.

The lender said its operating income in 2009 was generated mainly from core businesses, with the bigger base of earning assets and improved margins boosting net interest income by 33 percent to P30.6 billion.

“Net interest income was driven by the 20-percent expansion in gross customer loans to P472.7 billion, and growth in low-cost deposits,” it said. “Loan demand was sustained across all market segments, while low-cost deposit growth was fueled by additional branch redeployments.”

Noninterest income grew 13 percent, while fee-based service income, excluding trading income and one-time gains, grew 12 percent.

The bank’s nonperforming-loans ratio dipped to 3.2 percent at the end of 2009 from 4 percent a year ago.

It would have booked much bigger earnings had it not set aside hefty provisions for potential credit losses.

Although it had taken steps to adjust its risk-management processes even before the onset of the financial crisis in late 2008.

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