Bank of the Philippine Islands (BPI) posted P5.37 billion in net income for the fourth quarter of 2017, up 14.9% from P4.67 billion in the same period in 2016, on the back of robust revenues. For full-year 2017, net income reached P22.42 billion, up by 1.7% compared to 2016 results. Excluding one-off gains from the sale of securities in 2016, net income is up 31.3%. Comprehensive income grew 3.1% to P22.41 billion.
Total revenues reached P71.02 billion in 2017, up 6.7% as net interest income climbed to P48.04 billion, up 13.4% as a result of asset growth and improvement in net interest margin. Non-interest income dipped slightly to P22.98 billion, or down 4.9%, in the absence of the one-off trading gains recorded in the previous year. However, net of one-off gains from the sale of securities in 2016, non-interest income grew by 18.4%.
The absence of one-off gains was partially offset by higher fee-based income which climbed to P19.9 billion, a boost of 15.6% year-on-year, driven by higher credit card fees, trust and investment management fees, insurance fees, bank commissions and service charges.
The Bank continues to be a leader in profitability metrics, with cost-to-income ratio of 54.3%, slightly higher compared to 52.5% in 2016, driven mainly by digitalization initiatives. Return on Equity (ROE) was 12.8% and Return on Assets (ROA) was 1.3%, slightly lower by 1.0 and 0.12 percentage points, respectively.
Operating expenses totaled P38.53 billion, up 10.3% as spending on technology, operations and marketing increased in order to sustain growth initiatives, and as asset growth was accompanied by an increase in regulatory costs. Provisions for loan losses taken in 2017 amounted to P3.80 billion, 20.9% lower than 2016 in anticipation of the recognition of excess reserves under Philippine Financial Reporting Standards (PFRS) 9, which prescribes new accounting standards for financial instruments and impairment.
Total loans stood at P1.20 trillion, reflecting a robust year-on-year growth of 15.5%, driven primarily by corporate loans. Asset quality improved with the gross 90-day non-performing loans (NPL) ratio declining from 1.46% to 1.29%, and the reserve cover ratio increasing from 118.7% to 129.2%. Total deposits reached P1.56 trillion, up 9.1% with the current account and savings account (CASA) ratio at 71.2%. Loan-to-deposit (LDR) ratio stood at 77.0%.
The Bank’s securities position was stable at P306.12 billion, just slightly down by 0.41% from 2016. Over 90% of the securities portfolio was in held-to-maturity assets, and thus less exposed to interest rate risk.
Total assets expanded to P1.90 trillion in 2017, up 10.3%, while total capital reached P180.69 billion, up 9.4%, net of P7.09 billion in cash dividends paid. Capital Adequacy Ratio (CAR) was at 12.74% and Common Equity Tier 1 (CET1) was at 11.84%, both lower by 0.26 percentage points.
“We come out of 2017 stronger than ever”, said BPI President and CEO Cezar P. Consing. “While the Bank has grown significantly in the past several years, we intend to continue to invest in people, technology and branches to support and benefit from a surging Philippine economy. Inclusive, profitable growth will be our focus.”
In the 4th quarter of 2017, BPI announced the creation of the Business Banking Segment, a new client group, to sharpen focus on the banking needs of the country's small and medium scale enterprises (SMEs), with operations commencing January 1, 2018.
In November 2017, BPI raised a record P 12.24 billion from its offering of Long-Term Negotiable Certificates of Time Deposit (LTNCTD), the largest issuance by far in the industry.
Following these significant events, and the upgrade of the Philippine sovereign’s ratings in December 2017 by global debt watcher Fitch Ratings, BPI's Support Rating and Support Rating Floor was upgraded to ‘2’ and BBB-, respectively. Fitch likewise affirmed BPI’s Long Term Foreign and Local Currency Issuer Default Ratings at BBB-.
BPI also ended the year with a string of accolades from various organizations and publications given to notable subsidiaries: BPI Investment Management for investment funds, BPI Direct BanKo for its microfinance program, and BPI Capital for various landmark transactions.
Re-disseminated by The Asian Banker