BDO 1st half profit at record-high P40.6B

BDO Unibank Inc. will likely grow at a slower rate this year as the monetary policy easing cycle of the Bangko Sentral ng Pilipinas (BSP) is seen to take a toll on the Sy family-led bank’s margins.

Shawn Atienza, research analyst at AP Securities Inc., told the Inquirer on Monday that BDO would likely record a decline in net interest margins “as the effects of recent rate cuts from the BSP continue to trickle down into the economy.”

“Further margin erosion is a risk with more BSP rate cuts on the horizon, although this could also drive volume growth moving forward,” Atienza said in a Viber message.

Lower rates typically mean that banks would earn less interest from loans taken out by customers, thus impacting interest margin and overall profitability.

This came as BDO logged a modest 3-percent growth in its net income in the January to June period to P40.6 billion, its strongest first-semester performance to date, driven by stronger lending.

However, investments in market coverage and higher information technology spending tempered overall growth, the country’s largest lender said in a disclosure on Monday.

Net interest income rose by 7 percent to P98.1 billion on the back of a 14-percent climb in gross customer loans to P3.4 trillion.

Nonperforming loans ratio, a key indicator of asset quality, eased to 1.75 percent from 2.06 percent previously.

Noninterest income saw a 15-percent uptick due to gains from fee-based and insurance income.

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Well-positioned

BDO president and CEO Nestor Tan earlier warned that the bank may see slower growth this year with global uncertainties seen dampening loan demand.

Still, the bank said it “remains well-positioned to manage emerging risks and capitalize on opportunities given its robust capital base and diversified business franchise.”

BDO is also set to issue its fourth Association of Southeast Asian Nations sustainability bonds on July 29, aiming to raise at least P5 billion. The bank shortened the offer period by a week following strong demand from both retail and institutional investors.

Proceeds will fund or refinance eligible assets under BDO’s sustainable finance framework, support its lending activities and diversify its funding sources.