BPI booked record 9-mo income on rate cut boost

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Bank of the Philippine Islands (BPI) booked record earnings in the first nine months of the year as the Bangko Sentral ng Pilipinas’ (BSP) monetary policy easing allowed it to expand its loan portfolio.

In a stock exchange filing on Thursday, BPI said its net income expanded by 24.3 percent to P48 billion on “robust revenue growth.”

Total revenues jumped by 24.7 percent to P125.8 billion, driven mainly by higher net interest income, which grew by more than a fifth to P93.8 billion.

Personal loans soared by 103.3 percent, resulting in an 18.9-percent increase in BPI’s gross loans to P2.1 trillion.

This came after the BSP slashed the benchmark interest rate of big banks by 25 basis points to 6.25 percent in August, its first cut in nearly four years.

A monetary policy easing generally means good news for banks, as this lowers borrowing costs, therefore pulling up demand for loans.

As a result of its loan portfolio expansion, BPI’s nonperforming loans ratio, a key indicator of asset quality as it measures the borrower’s capability to repay loans, ended higher at 2.30 percent from 2.20 percent previously.

Meanwhile, noninterest income rose by 32.4 percent to P31.9 billion on gains from securities trading, higher service charges, credit card fees and bancassurance income.

Operating expenses climbed by 22.1 percent to P59.4 billion as manpower, transaction processing and technology costs increased.

Total assets at the country’s fourth largest bank grew by 17.2 percent to P3.2 trillion as of end-September.

In the July to September period alone, BPI’s net income reached P17.4 billion, up by 29.4 percent, representing its highest quarterly earnings to date.

Analysts have said that the country’s banks are expected to book their best performance this year, especially with the rate cuts. The BSP on Wednesday further reduced rates by a quarter-point to 6 percent.

BPI president Jose Teodoro Limcaoco had said they were “fairly confident that it’s going to be a good, strong year.”

“What we see is that the consumer remains fairly resilient,” Limcaoco said during a press briefing in April. “There’s a lot of confidence. We’re continuing to see very strong growth along those segments and for us, I think that’s the reason why our income was quite healthy.”