earnings reports

BDO profits improve in Q3 2020, but soured loans rising

Ralf Rivas
BDO says soured loans have not yet peaked, while interest rate caps on credit cards will put further pressure on profits

BDO Unibank saw its net income slightly go up by 3% to P12.3 billion in the 3rd quarter of 2020, but warned that soured loans continue to rise amid the coronavirus pandemic.

The improvement in the 3rd quarter brought 9-month earnings to P16.6 billion, a 48% decline. 

While profits of the Philippines’ largest bank improved from the 78.6% dip in the 1st half of the year, BDO warned that more issues continue to put pressure on earnings.

“The delinquency problem on loans [has] not yet peaked, interest rate caps on credit cards will be instituted soon, and there are added costs in doing business as a result of necessary precautions inherent in the bank’s operations,” BDO said.

Loans rose at a tempered 6% to P2.2 trillion, driven by corporate and consumer accounts. (READ: From malls to banks: The pandemic’s domino effect)

Gross non-performing loan (NPL) ratio slightly went up to 1.97%, while NPL cover settled at 138%. Total loan provisions amounted to P23.8 billion.

Total deposits grew to P2.6 trillion, while non-interest income settled at P36.8 billion.

“BDO believes that its strong business franchise and robust balance sheet place the bank in a good position to leverage on a post-pandemic economic recovery,” it said. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.