BPI net income jumps 21% to P8.1B in 2005

BPI net income jumps 21% to P8.1B in 2005

The Philippine Star 02/01/2006

Bank of the Philippine Islands (BPI), the country’s second-largest lender, said yesterday its unaudited profits rose about 21 percent last year, helped by property sales and growth in its asset base.

Profits at BPI, owned by conglomerate Ayala Corp. and Singapore’s DBS Group, are expected to increase 17 percent this year to P9.48 billion, according to nine brokers surveyed by Reuters Estimates.

Bank president Aurelio Montinola III said last month BPI should "at least match" its 2005 performance this year, with an improving business environment.

BPI said 2005 net income stood at P8.1 billion against P6.7 billion in 2004. The result just missed market estimates for P8.23 billion, but profit growth was higher than the bank’s own forecast of P7.3 billion.

BPI’s 2005 result excludes adjustments related to new financial standards adopted by Philippine firms, which could result in changes in revenue and profit figures, BPI said in a statement.

But they do include a four-month contribution by Prudential Bank, a mid-sized local bank BPI bought last year.

For the fourth quarter, BPI had P1.75 billion in profit, up 25 percent from P1.4 billion in the same period of 2004.

BPI said last year’s net interest income rose 21 percent and non-interest income gained 27 percent.

It gave no revenue figures for last year but in 2004 it had reported net interest income before provisions of P15.5 billion and non-interest income – mainly service charges and trading gains – of P7.2 billion.

"The net interest income growth was fuelled by the 14 percent expansion in the bank’s average asset base and the 29 basis point increase in net interest margin," the bank said.

BPI said the rise in non-interest income was mainly due to asset sales and higher contributions from its insurance subsidiaries and asset management and trust units.

BPI shares, valued at around $2.5 billion, were unchanged at 59 pesos by 0342 GMT on Tuesday. The main stock index was up 0.5 percent. BPI stock gained 4.8 percent in the 2005 fourth quarter, lagging a 7.9 percent rise by the main index. ($1=P52.2)

Total resources expanded by 12 percent to P528 billion while capitalization grew to P122.3 billion with a book value of P56 billion.

Deposits likewise grew by 14 percent to P420 billion and gross loans by 10 percent.

However, provisioning for probable losses also grew to P1.8 billion.

BPI plans to dispose of between P2 billion to P3 billion in bad assets either through auction, wholesale or retail sales. Recently, it sold several pieces of properties in Alabang worth P50 million.

In 2005, the bank sold P8.6-billion worth of non-performing loans (NPLs) via the special purpose vehicle (SPV) route. It also formed a joint venture with sister company Ayala Land Inc. in several Ayala Alabang properties. Joint ventures is another option for banks to rid or utilize its real and other properties owned and acquired (ROPOAs).