BDO UNIBANK, Inc. (BDO) saw its net income grow by 40.44% year on year in the first quarter as it recorded “broad-based growth” across all its businesses.
BDO’s attributable net income stood at P16.528 billion in the January- to-March period, rising from P11.679 billion in the same quarter last year, based on its quarterly report disclosed to the local bourse on Tuesday.
This translated to a return on average common equity of 14.45%, up from 11.09% in the same period in 2022, and a return on average assets of 1.64%, also up from 1.29% a year prior.
Net interest income grew by 27.95% to P43.391 billion in the first quarter from P33.912 billion in the comparable year-ago period.
This came amid an increase in interest earnings from loans and trading and investment securities, which helped offset a rise in interest expense on deposits.
Net interest margin rose to 4.58% from 4.03% “following earning asset expansion in a rising interest rate environment.”
Meanwhile, other operating income likewise grew by 33.52% year on year to P18.919 billion on the back of an increase in earnings from service charges, fees and commissions and a higher net trading gain.
On the other hand, operating expenses (opex) climbed by 17.5% to P37.42 billion, which BDO said was due to volume-related costs, such as credit card interchange fees and documentary stamp and gross receipts taxes, “consistent with increased activity.”
“The bank also sustained its IT (information technology) investments and branch expansion, with 97 new branches opened since 1Q 2022,” BDO said in a statement.
“Revenue growth continued to outpace opex growth, resulting in pre-provision operating profit accelerating to P24.9 billion,” it added.
BDO said its gross customer loans increased by 8% to P2.6 trillion, while total deposits grew by 14% to P3.22 trillion.
Its nonperforming loan (NPL) ratio improved to 1.98% in the first quarter from 2.72% a year prior. NPL coverage increased to 170% from 120% “as the bank maintained its conservative credit and provisioning policies.”
“Given the uncertainty, the bank has maintained a healthy balance between loan growth and sufficient liquidity for unforeseen events, maintaining its liquidity ratio at 35%,” it said.
BDO’s capital base was at P475.9 billion in the first quarter. Its capital adequacy ratio stood at 14.81%, up from 14.64% a year prior, while its common equity Tier 1 ratio was at 13.7%.
Total assets stood at P4.087 trillion at end-March 2023.
“While macroeconomic challenges persist with still elevated inflation and interest rates, the bank believes it is in a good position to weather short-term volatility and capitalize on long-term growth opportunities given its sound balance sheet, established business franchise and strong and diversified earnings streams,” BDO said.
BDO shares fell by 40 centavos or 0.31% to close at P127.90 each on Tuesday.
