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BPI Net Income Down 15% in First Half of 2020

First half provisions climb to P15 billion.
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Bank of the Philippines reported a net loss during the first six months of 2020 mainly due to higher provisions for loan losses triggered by the coronavirus pandemic. 

The Ayala-led bank said net income dropped to P11.68 billion during the first half of the year, down 15 percent from the P13.74 billion it recorded during the same period in 2019. BPI said it booked P15.01 billion in provisions for loan losses in the first semester of 2020 “as the COVID-19 pandemic ushers in a difficult period for consumers and businesses that could lead to potentially higher NPLs (no-performing loans).

The provision is 4.3x more than the P3.48 billion the bank set aside during the same period in 2019.

Provision is defined as an amount reserved for potential economic obligations of a company. It’s essentially a “just in case fund” used in the event of loan defaults.

BPI’s revenues for the first six months rose 14.8 percent to P52.69 billion while net interest income also grew 12.5 percent to P36.40 billion on 5.9 percent expansion in average asset base supported by an 18-basis point expansion in net interest margin to 3.55 percent. Non-interest Income was at P16.29 billion, an increase of 20.3 percent versus the same perido last year, primarily from higher securities trading gains.

The bank also reported that ita had completed the offering for the BPI COVID Action Response (CARE) Bonds, with a tenor of 1.75 years and a coupon rate of 3.05 percent p.a. paid quarterly.

"The BPI CARE Bonds are slated for issuance and listing on the Philippine Dealing & Exchange Corp. (“PDEx”) on August 7, 2020. The proceeds of the CARE Bonds will be used to finance and refinance eligible Micro, Small and Medium Enterprises (“MSMEs”) under the Bank’s Sustainable Funding Framework," BPI said.

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"MSMEs have been significantly affected by the global pandemic and BPI said it recognizes that these enterprises, which account for a significant percentage of the country’s employment, are critical to the growth and recovery of the economy," it added.

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Paul John Caña
Associate Editor, Esquire Philippines
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