BPI’s 2014 net income falls due to investment, lower trading gains

Chris Schnabel
BPI’s 2014 net income falls due to investment, lower trading gains
The BPI president says 2014 was an investment year for the bank

MANILA, Philippines – The country’s oldest bank, Bank of the Philippine Islands (BPI) saw its net income for 2014 decrease due to investments and lower trading gains.

The bank’s net income for 2014 was P18.04 billion ($406.3 million), down by almost P800 million ($17.9 million) or 4.1% from last year’s figure of P18.81 billion ($422.7 million).

This decrease is due mostly to a P4.2 billion ($94.3 million) increase in operating expenses provisions and taxes, which offset a P3.3 billion ($74.1 million) or 6.3% increase in total revenues.

Lower trading gains was also a cause for the decline, with securities down P3.5 billion ($78.6 million) or 71.8% compared to 2013.

As a result, return on equity was 13.8% compared to 2013’s 18.1%.

The bank’s comprehensive income, which includes equity changes that are not permitted to be included in profit or loss, rose however to P17.97 billion ($403.9 million) from P14.23 billion ($319.78 million) in 2013. 

Despite the decrease in overall net income, BPI’s core business of customer loans and deposits grew significantly, said BPI Executive Vice President Natividad Alejo.

As of 2014, the BPI’s total assets stood at P1.4 trillion ($31.4 billion), with loans of P800 billion ($17.9 billion) and deposits of P1.2 trillion ($26.9 billion) – all-time highs for the bank.

Loans and deposits also grew by 27% and 19% respectively from 2013.

Investment year

BPI President Cezar Consing attributed the slight decrease to 2014 being an investment year for the bank.

He said that the quality of the earnings was very good, highlighting a major increase in asset base.

Two years ago the bank had less than a P1 trillion ($22.47 billion) in assets and now the bank holds close to P1.4 trillion assets ($31.4 billion).

“We’ve taken advantage of the growth that the Philippine economy has presented us,” said Consing at a briefing following the annual BPI stockholders’ meeting Wednesday, April 8 in Makati City.

Consing explained that the most significant investment the bank made was an increase in head count, with the bank adding 1518 employees. 

The bank also spent significantly on technology, which was up by around 20%, Consing said.

The number of transactions routed through the BPI grew by 2 and half times, he added.

This resulted in increases in cost-income ratios, but BPI is expecting to see some of the fruits the investment to be seen this year, he said.

Consing added that while BPI will continue to invest in the business this year, the rate of investment will slow down though because 2014 was “the big one.”

For instance, the bank opened a representative office in Tokyo in 2014 mostly to cater to the remittance market. 

BPI also entered into strategic partnerships with Century Tokyo Leasing Corporation to reinforce the bank’s leasing programs and global payments; and a listed New York-based payments firm, to broaden the service offerings for BPI card customers.

The bank now has 7 million customers, with a further 1 million added from the bank’s microfinance unit, BPI Globe BanKO.

“That is our entry point and sets us up well for 2015,“ Alejo said.

The bank’s capital ratios are also well within the Bangko Sentral ng PIlipinas (BSP) Basel 3 minimum requirements, with capital adequacy ratios (CAR) at 14.8% and Common Equity Tier 1 (CET1) at 14%.

Despite BPI’s relatively flat earnings in 2014, parent firm Ayala Corporation’s net income grew by almost 50% on the performance of its other business units. – Rappler.com


$1 = P 44.47

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