BDO Regains Income Momentum in 3Q 2020

BDO reports gaining moment in 3Q 2020. This is a sign that there is movement and improvement in our economy. The Philippines is rising up from the economic sabotage brought by the Covid-19 pandemic.

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Economic Recovery Starting on 3Q 2020

BDO Unibank, Inc. (BDO) recently posted P12.3 billion in net income for the 3Q 2020 period.

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This is happening despite the continuing impact of the Covid-1 pandemic on our economy. Their earnings for the first nine months of the year now total P16.6 billion — a decline of 48% from the same period last year.

It cannot be denied that this is due to the upfront provisions booked in 2Q 2020 in anticipation of potential delinquencies due to the pandemic.

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Despite the promising results, BDO recognizes that there are still difficulties because of the pandemic.

Full Support for Local Businesses

So far, the delinquency problem on loans has not yet peaked. Meanwhile. interest rate caps on credit cards will be instituted soon.

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Plus, there are added costs in doing business as a result of necessary precautions inherent to the bank operations. All of these and more are seen to put pressure on the bank’s earnings.

Loans rose at a more tempered 6% — amounting to P2.2 trillion. This figure is driven by corporate and consumer accounts.

BDO remained supportive of its borrowing clients, ensuring continued access to their credit facilities. The bank wants to help businesses manage their funding requirements during these challenging times. This is notwithstanding loan payment deferments under Bayanihan I and II.

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Asset quality remained stable, with gross non-performing loans (NPL) ratio at 1.97%. Meanwhile, the NPL cover settled at 138%.

Total provisions for 9M 2020 amounted to P23.8 billion, inclusive of the pre-emptive provisions in 2Q 2020. 

Other Bank Data

Total deposits grew to P2.6 trillion, driven by the faster growth in Current Account/Savings Account (CASA) deposits. This is due to the fact that almost all of BDO branches are operational since 2Q 2020.

The bank’s CASA ratio climbed to a new high of 79%. Net interest income (NII) went up by 13% year-on-year to P99.8 billion.

Non-interest income settled at P36.8 billion, led by fee-based income and insurance premiums at P20.2 billion and P10.9 billion, respectively.

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Wealth management remained resilient with trust volume and fees sustaining steady growth despite soft market conditions. However, some of the Bank’s businesses, specifically those that rely on face-to-face interaction, are still gradually rebuilding their volumes.

Income vs. Expenses

Operating expenses by 3Q 2020 declined by 3%, to P83.6 billion on lower volume-related expenses.

Therefore, the bank’s balance sheet remains solid with a capital base of P378.6 billion.

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Meanwhile, Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio were at 14.3% and 13.2&, respectively. So both are remaining well above the regulatory minimum.  

BDO believes that its strong business franchise and robust balance sheet place the bank in a good position. They are ready to leverage on a post-pandemic economic recovery.