BDO Q1 profit growth tempered as bank builds buffers for global risks
BDO Unibank Inc. reported modest profit growth in the first quarter as the Middle East war casts a shadow over its outlook for the rest of the year.
In a disclosure on Friday, BDO saidthat it netted P20.1 billion in the first three months of 2026, up 2 percent from a year earlier.
Net interest income grew by 11 percent to P53 billion, backed by a 16-percent expansion in the bank’s lending portfolio to P3.8 trillion.
“Net income was tempered by higher provisions, as the bank is building strong reserves, primarily a pre-emptive measure undertaken in response to evolving geopolitical risk conditions,” the company said.
Noninterest income also grew, rising by 6 percent to P19.8 billion. This was attributed to a 4-percent uptick in fee income to P15.5 billion.
Trading and foreign exchange gains went up 11 percent to P1.8 billion.
Meanwhile, income from BDO’s insurance operations delivered a 27-percent growth to P2.1 billion.
Those drivers of revenue, in turn, more than offset the 6-percent rise in operating expenses to P43.4 billion.
At a press conference ahead of the company’s annual stockholders meeting, Nestor Tan, the bank’s president and CEO, said that the lack of clear progress toward the resolution of the US-Israel war on Iran is weighing on the bank’s outlook.
“Resulting inflation shock may weigh on consumption spending,” Tan said. “Corporate capex may be affected as a result of inflation.”
Already, debt watchers like Moody’s Ratings warned that the oil price shock could stoke anti-inflation rate hikes that may slow bank lending and strain borrowers’ ability to make timely payments.
Moody’s expects domestic loan growth this year to slow to 8 to 9 percent, down from the double-digit increases of recent years.
Financial results showed bad loans accounted for 1.68 percent of BDO’s total loan book in the first quarter, lower than the 1.77 percent ratio posted a year earlier. Provisioning for potential credit losses could cover 131.9 percent of soured debts, down from a 143.4 percent coverage ratio a year ago.
Funding remains strong. Total deposits expanded by 15 percent, with current account or savings account growth accelerating to 7 percent.
