October 25, 2015

BDO nets P17.6b in 9M15

In a disclosure to the Exchange, BDO Unibank (BDO) said that it netted P17.6b in 9M15, 5.6% higher YoY. The bank grew its loan portfolio by 19% YoY to P1.2t on the back of sustained growth across target segments. This was supported by the 12% increase in deposits to P1.6t, supported by the bank’s continued branch expansion, with low-cost deposits growing at a faster pace of 16% YoY. These brought 9M15 net interest income to P41.8b, 12% higher YoY.

Fee-based income came in at P13.9b, growing 9% while trading and FX gains was at P6.3b, 4% higher YoY. So far this year, the bank has set aside provisions amounting to P2.7b, markedly lower than the P3.9b booked in the same period last year, as the bank’s asset quality continued to improve. The bank’s NPL ratio declined to 1.2% from 1.4% last year, while NPL cover stood at 182%, relatively the same level as last year.

Our take: BDO’s 9M15 results are trailing our expectations, accounting for just 69% of our 2015E earnings estimate. This can be traced to the slower than expected pick-up in net interest income which, in turn, is a result of continued margin pressures due to competition and delayed interest rate hikes. The sustained loan and low-cost deposit growth were not adequate to fully offset margin compression. The bank was also able to lower its provisions on the back of the continued improvement in its NPL ratio. We will review our numbers pending the release of the full details of BDO’s results. – WealthSec