March 03, 2014

BDO nets P22.6b in 2013

In a disclosure to the Exchange today, BDO Unibank (BDO, Buy) reported that its net income reached a record of P22.6b in 2013, or 56% higher YoY. Net interest income grew 20% to P43.2b, consistent with the 19% growth in loans. Deposits, on the other hand, grew 44% to P1.3t. It also realized P12.8b in trading and foreign exchange gains while growing its fee-based income by 15% to P15.5b.

Notwithstanding the bank’s growth, operating expenses was kept at a manageable pace (+9.5% to P43.2b). NPL ratio decreased from 2.8% in 2012 to 1.6% in 2013 while the bank’s CAR and Tier 1 Ratios remained well-above regulatory requirements, at 15.8% and 14.6%, respectively, in end-2013.

Our Take: BDO’s results come ahead of its earnings guidance of P20.4b and consensus estimates of P21b. Despite this, BDO’s net income of ~P4.4b for 4Q13 comes at a slower pace compared to the P18.2b that it earned in 9M13. We surmise that this is in part due to some deceleration in the bank’s trading gains.

While we remain positive on the bank’s growth prospects, we are watchful for any possible unrealized losses that the bank may have incurred on its available for sale investment portfolio. – WealthSec