November 06, 2006
Updated 17:24:01 (Mla time)
(UPDATE) BANCO de Oro Universal Bank, which is merging with rival Equitable PCI Bank to create the Philippines' largest lender by assets, announced a 53 percent rise in quarterly net profit on Monday, aided by trading gains.
BDO, the Philippines' seventh-largest lender by assets, said it booked a net profit of P1.03 billion ($21 million) for the third quarter, as a decline in interest rates in the quarter propelled dealing profits. It also benefited from higher fees and charges during the period.
BDO, a unit of conglomerate SM Investments Corp., is expected to record full-year net profit of P3.4 billion, according to Reuters Estimates, 34 percent up from P2.54 billion the previous year.
The Philippine banking sector, crowded with small and medium-sized, family-owned operations, has been reporting strong third quarter profit growth but with wide variations in operational performance.
Last week, the country's largest lender, Metropolitan Bank and Trust Co., announced a 37 percent increase in third quarter net profit as falling costs offset a 20 percent drop in lending profits and a leap in bad debt provisions.
Second-largest lender Bank of the Philippine Islands' third quarter profits rose 11 percent due to strong fee income and lower provisions for soured debt.
Last week, the Philippine central bank loosened overnight borrowing rates to stimulate loan growth among risk-adverse commercial banks, still saddled with bad debt from the Asian financial crisis of 1997-98.
THE board of Banco de Oro Universal Bank (BDO) agreed later on Monday to the merger with larger rival Equitable -- which said last week its nine month net profit rose 34 percent to 2.37 billion pesos -- in the biggest banking deal in seven years.
The merger of the two banks, with combined assets of about 613 billion pesos ($12 billion) as of end-June, would displace Metropolitan Bank and Trust Co. as the Philippines' top bank, according to Reuters calculations.
BDO's third quarter performance -- 85 percent higher than the preceding three months -- pushed its net earnings in the first nine months of the year up 23 percent to 2.29 billion pesos. Its net interest income in the first three quarters rose 17 percent and non-lending income increased 47 percent to 3.7 billion pesos.
Shares in BDO, the Philippines' fourth-largest bank by market value, immediately rose in early trade after the announcement. However, it finished flat at P44.50 on Monday after the index closed 0.11 percent weaker, breaking 11 straight days of gains that had propelled the market to nine-year highs.
BDO shares have gained 31 percent since the start of the year and the bank is valued at around 12 times 2007 earnings, according to Reuters Estimates.
Equitable's shares were unchanged at 72.50 pesos.
($1 = 49.745)
http://services.inq7.net/express/06/11/06/html_output/xmlhtml/20061106-30865-xml.html
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