BPI Q3 net income up 12% on higher interest rates

Bank of the Philippine Islands (BPI) reported a 12-percent growth in net income in the third quarter, driven by loan repricing after the Bangko Sentral ng Pilipinas (BSP) raised interest rates.

Net income grew by 12 percent to P5.98 billion in July to September, led by a 21-percent growth in net interest income, the bank said Wednesday.

“On a quarter-on-quarter basis, net interest margin expanded by 14 basis points as a result of favorable loan repricing following the BSP policy rate hike earlier in the quarter,” the Ayala-led lender said.

Last June, the BSP delivered its second rate hike for 2018. It raised policy rates by 25 basis points that lifted the overnight borrowing rate to 3.50 percent, the overnight lending rate to 4.00 percent, and the overnight deposit rate to 3.00 percent.

The BSP has since raised rates two more times which brought the overnight borrowing rate to 4.50 percent, the overnight lending rate to 5.00 percent, and the overnight deposit rate to 4.00 percent.

“Interest rates are trending up and that always tends to help banks as long as they don’t trend up too high ... The ability of banks to reprice their assets certainly helps their bottom lines. If they trend up too high, then you’re going to see loan losses,” BPI president and CEO Cezar Consing said last April.

Net income in the first nine months of the year rose P17.01 billion, unchanged from January to September 2017.

“Year-to-date, the bank registered higher fee-based income from its credit card, deposit, and rental businesses,” BPI said.

Revenues in the nine months rose by 7.3 percent to P56.89 billion as total loans grew by 12.9 percent to P1.27 trillion and total deposits rose 2.5 percent to P1.54 trillion. —Jon Viktor Cabuenas/VDS, GMA News