BDO Unibank, Inc. (BDO) reported an all-time high net income of P28.1 billion in 2017 on strong growth across all business segments, matching the Bank’s earnings guidance and marking a seven (7) per cent rise year-on-year. Excluding consolidation effects of the life insurance business, however, this represented a strong 15 per cent jump in core earnings on the back of solid growth in loans, low-cost deposits and fee-income.

The sustained expansion in lending, deposit-taking and fee-based businesses drove the Bank’s solid performance last year. Customer loans rose by 18 per cent to P1.8 trillion on broad-based increases across all loan segments, while total deposits went up by 11 per cent to P2.1 trillion, led by the 12 per cent growth in low-cost CASA deposits (comprising 73 per cent of total deposits). As a result, net interest income rose by 25 per cent to P81.8 billion.

Non-interest income contributed P47.2 billion, higher by 13 per cent, with fee-based income accounting for P28.9 billion for a 30 per cent expansion. In addition, insurance premiums went up by 23 per cent to P9.9 billion. These compensated for the expected 20 per cent decline in trading and forex gains to P3.9 billion given the challenging market conditions. Overall, gross operating income advanced by 20 per cent to P129.0 billion.

Meanwhile, operating expenses rose by 21 per cent to P84.9 billion. However, excluding extraordinary items, operating expenses would have increased by 15 per cent, reflecting BDO’s continuing investments in its branch network and strategic initiatives. BDO added 76 branches, bringing total consolidated branches (including HK branch) to 1,180, in 2017.

The Bank set aside higher provisions amounting to P6.5 billion to cover required provisioning associated with the change in loan loss methodology to Expected Credit Losses (ECL) related to BSP Circular 855 and IFRS9. Gross non-performing loan (NPL) ratio improved to 1.2 per cent from 1.3 per cent as of end-2016. NPL cover improved to 146 per cent from 139 per cent in 2016.

The Bank’s capital base stood at P298.3 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio at 14.5 per cent and 12.9 per cent, respectively, both well above regulatory levels. The Bank had raised P60 billion in fresh equity via a stock rights offer (SRO) in January 2017.

For 2018, BDO believes that its focused growth strategy, robust business franchise and solid balance sheet and capital base place the Bank well-positioned to tap opportunities in growth sectors benefiting from the country’s favorable demographics and the government’s infrastructure build-up.