BDO nets P13.3B in 1st half of 2017

Chris Schnabel
BDO nets P13.3B in 1st half of 2017
The bank also announces a P5-billion bond offering to diversify the maturity of its funding sources and support business expansion plans

MANILA, Philippines – Sy family-led BDO Unibank Incorporated (BDO), the country’s largest bank in terms of assets, recorded relatively flat earnings for the 1st half of this year on lower gains from trading and foreign exchange.

In a disclosure to the Philippine Stock Exchange (PSE) on Monday, July 31, the bank said its net income hit P13.3 billion in H1 2017 compared to the P13.2 billion it saw in the same period last year.

But BDO noted that excluding the non-recurring items from the consolidation of newly acquired subsidiary BDO Life last year, this represents a strong 16% growth in core earnings.

The bank’s net income in H1 2017 was driven by customer loans which increased by 17% to P1.6 trillion, while total deposits rose to almost P2.0 trillion, supported by the 17% jump in low-cost CASA deposits.

CASA deposits now comprise 73% of total deposits which also helped net interest income rise by 22% to P38.6 billion.

Non-interest income, meanwhile, amounted to P23.2 billion, driven by fee-based service income which rose by 13%. Insurance premiums also grew by 17% to P4.6 billion.

Trading and forex activities pulled down BDO’s overall bottom line, however, declining by 21% to P2.6 billion compared to the P3.2 billion in the same period last year.

BDO’s operating expenses also increased by 20%, although excluding non-recurring items and the consolidation effects of One Network Bank and BDO Life, operating expenses would have risen by only 14%.

The bank has set aside provisions of P2.9 billion, while its gross non-performing loan (NPL) ratio remained steady at 1.3%, and NPL cover stood at 137%.

P5-billion bond offer

BDO also announced in a separate disclosure to the PSE on Monday that it would offer P5 billion worth of Long-Term Negotiable Certificates of Deposit (LTNCDs).

The offering is part of the bank’s efforts to diversify the maturity of its funding sources and support business expansion plans. It also has the option to increase the issue size, depending on market feedback, BDO said in its disclosure.

LTNCDs have a designated maturity and represent a bank’s obligation to pay the face value upon maturity, with periodic coupon or interest payments during the life of the deposit.

Interest income is exempt from withholding taxes if the LTNCDs are held for at least 5 years. LTNCDs are also covered by deposit insurance with the Philippine Deposit Insurance Corporation.

The latest LTNCDs will have a term of 5.5 years with indicative pricing at 3.50% to 3.75%. The final coupon rate will be set prior to or at the end of the offer period.

Interest will be paid quarterly in arrears with the minimum investment set at P100,000 with increments of P50,000. The offer period will start on July 31 up to August 11, with the issue date set for August 18.

The bank said, however, that it reserves the right to adjust the timing of the offer as needed.

The local units of Deutsche Bank AG and ING Bank NV are the joint lead arrangers and selling agents for the issue, while BDO and BDO Private Bank are the other selling agents.

BDO last issued P7.5 billion worth of LTNCDs in April 2015. –

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