Monday, 26 April 2010

BDO Leasing posts 29 % profit growth for Q1

Erik de la Cruz
Business Mirror

THE reporting season for first-quarter corporate earnings has begun on an upbeat note in the Philippines, with BDO Leasing and Finance Inc.—a listed unit of tycoon Henry Sy’s Banco de Oro Unibank—posting a 29-percent profit growth on higher revenue.

BDO Leasing, in a regulatory filing, said net income for the three months to March jumped to P69.6 million from P53.9 million for the same period last year. It has a wholly owned subsidiary, BDO Rental Inc., which is engaged in renting and leasing of equipment.

Revenue grew 24.5 percent to P583.6 million, 92 percent of which accounted for interest, discounts, rent and service fees. This was primarily due to the increase in lending to P12.4 billion from P8.8 billion in March 2009.

Interest and financing charges amounted to P80.2 million, consisting of financing charges on borrowings totaling P66.7 billion and interest expense on leased deposits of P13.4 million.

“Financing charges increased by P0.8 million versus March 2009’s P81 million due to the increase in bills payable from P4.1 billion in March 2009 to P6.4 billion in March 2010 to fund business growth,” the company said.

Cost of borrowings, however, de-creased from a range of 5.6 percent to 7.4 percent in March 2009 against a range of 4.3 percent to 4.6 percent in March 2010. Total provision for credit losses amounted to P50 million as of March 2010 compared with P15 million a year earlier.

BDO Leasing has nine branches located in Makati City, Cagayan de Oro City, Cebu City, Dagupan City, Davao City, Iloilo City, Dasmariñas, Angeles City and San Pablo City.

It competes with other financing companies affiliated with other banks, independent financing companies, and other financing companies affiliated with diversified financial-services firms.

Its principal competitors are Orix Metro Leasing & Finance Corp., a unit of Metropolitan Bank & Trust Co.; BPI Leasing Corp.; LBP Leasing Corp.; Japan PNB Leasing & Finance Corp.; UCPB Leasing and Finance Corp.; First Malayan Leasing and Finance; and Allied Leasing.

BDO Leasing had total assets of P13.5 billion at the end of March, representing a 22-percent growth over year-ago size of P11.1 billion and reflecting the increase in net loans of P2.3 billion.

It posted a 61.4-percent revenue growth for 2009 but net income dropped to P300 million, compared with the previous year’s bottom line of P366 million, because of depreciation costs and “more conservative” provisioning.

The company last year obtained regulatory approvals to issue up to P8 billion of short-term commercial papers (STCPs). It planned to use the proceeds to repay maturing obligations, a move that will bring down funding costs, and to fund new ventures.

In December Philippine Rating Services Corp., or PhilRatings, announced it had assigned a “PRS 2 minus” rating to the company’s proposed debt issue. The indicates the company’s “strong” capability to pay both the principal amount and interest on the STCPs.

According to PhilRatings, the rating took into account the prospective borrower’s “solid” market position, “sound” capital base, continuing benefits being derived from its synergy with parent company BDO, as well as the “relatively positive” prospects for the local leasing and finance industry.

BDO Leasing has the largest asset and equity base and is seen as the least leveraged among the country’s bank-affiliated leasing and finance companies.

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