BPI H1 net income down 15% due to higher loan loss provisions

Ayala-led Bank of the Philippine Islands (BPI) saw its net income slip by 15% in the first half of 2020, dragged by higher provisions for potential loan losses amid the COVID-19 pandemic.

In a disclosure to the Philippine Stock Exchange on Thursday, BPI said it booked P15.01 billion in provisions for loan losses in the first semester of 2020 as “the COVID-19 pandemic ushers in a difficult period for consumers and businesses that could lead to potentially higher NPLs (non-performing loans).”

The provision for expected credit losses is 4.3 times more than the P3.48 billion set aside during the same period in 2019.

“This resulted in a net income of P11.68 billion for first semester 2020, a decline of 15.0% from P13.74 billion registered in the same period last year,” BPI said.

The second quarter net income was at P5.29 billion, down 24.6% from P7.01 billion year-on-year.

Total revenues in the first half, meanwhile, increased by 14.8% to P52.69 billion.

Net interest income grew by 12.5%, reaching P36.40 billion on 5.9% expansion in average asset base supported by an 18-basis point expansion in net interest margin to 3.55%.

Non-interest income was at P16.29 billion, up 20.3% primarily from higher securities trading gains.

Operating expenses for the first semester totaled P24.19 billion, down by 0.3% from the previous year on lower premises, technology, and marketing and product expenses.

Total loans as of June 30, 2020 reached P1.43 trillion, up 5.9% year-on-year, with growth recorded in microfinance, corporate, and consumer loan segments at 41.4%, 8.4%, 2.5%, respectively.

Total deposits increased to P1.76 trillion, up 6.3% year-on-year, driven by CASA (current account-saving account) deposits which grew by 11.8%.

Total assets stood at P2.26 trillion, higher by 5.8% year-on-year.

BPI said it recently completed the offering for the BPI COVID Action Response Bonds (CARE), with a tenor of 1.75 years and a coupon rate of 3.05% p.a. paid quarterly.

The BPI CARE Bonds are slated for issuance and listing on the Philippine Dealing & Exchange Corp. on August 7, 2020.

The proceeds of the CARE Bonds will be used to finance and refinance eligible micro, small and medium enterprises under the bank’s Sustainable Funding Framework.

“MSMEs have been significantly affected by the global pandemic and BPI recognizes that these enterprises, which account for a significant percentage of the country’s employment, are critical to the growth and recovery of our economy,” BPI said. — Ted Cordero/RSJ, GMA News