The Bank of the Philippine Islands (BPI) has opted to grow its loan-to-deposit ratio with prudent domestic loans funded by low-cost deposits, the bank said Tuesday.
BPI said it now has an asset base of P789 billion and deposits of P625 billion, just slightly ahead of the figures in 2010, with the Philippines showing resilience from the global crisis and the prevailing low interest rate environment.
The bank added that despite minimal deposit growth, total intermediated funds of P1.3 trillion grew by 20 percent, coming primarily from a 44-percent growth in assets under management.
The bank also said loan growth was sustained at 22 percent over last year, and remained broad-based across market segments and geographically as well. Corporate sector loan growth meanwhile sustained its strength with the following growth rates: top tier corporations (24 percent), middle market (30 percent), SMEs (20 percent), while consumer loans growth was modest at 11 percent.
Loan-to-deposit ratio thus improved from 56 percent to 66 percent with the peso component now at 75 percent from 64 percent, BPI said.
Meanwhile, net 30 days non-performing loans (NPL) remained below the industry NPL ratio at 2.3 percent with reserve cover of 115 percent despite the growing loan portfolio, according to BPI. The bank’s Basel II capital adequacy ratio (CAR) was 15.8 percent while Tier 1 CAR was 14.4 percent.
“The bank’s strategy enabled it to maintain its net interest margin and, despite the market volatility in the third quarter of the year, to grow its net income by 6 percent to P9.6 billion for the first nine months of the year. Return on equity was 15.5 percent and return on assets was 1.6 percent," BPI explained.
Higher fees and commissions
The bank said total revenues were up by 7 percent as net interest income improved by 9 percent, fueled by a P67-billion growth in average asset base. Non-interest income was just slightly ahead of the previous year as securities trading gains fell short by P809 million from last year as expected. This was, however, more than compensated for by higher fees and commissions, income from insurance operations, and other operating income, according to BPI.
BPI said operating costs were higher by 13 percent with half of the increase arising from salary adjustments and CBA-related expenses. Increases were also seen in premises cost, regulatory costs, and other variable expenses.
With the bank’s relatively stable asset quality and sufficient loan-loss reserve coverage, the Bank booked lower year-to-date impairment losses of P1.5 billion, BPI said.
“Despite sustained growth, we are still cautious and monitoring external events and any possible transmission risks to BPI. We have therefore decided to focus on the safety of our assets and the maintenance of our yields at the expense of asset growth," BPI president and CEO Aurelio Montinola III said.
“Given a risk on, risk off environment, we are communicating more with our customers to provide better than foreign market investor returns and robust, diversified lending growth to help the economy," he added. — PE/V
