Ayala-led Bank of the Philippine Islands (BPI) sees another record year in terms of earnings amid the expected strong loan growth despite higher interest rates.

BPI president and CEO Jose Teodoro 'TG' Limcaoco said the bank sees this year's net income exceeding the record high level booked last year amid the strong recovery of its core businesses.

'The budget is to beat last year. That's the plan,' Limcaoco told reporters on the sidelines of the launching of the bank's mobile app.

Earnings of the 171-year-old bank jumped by 66 percent to an all-time high of P39.6 billion in 2022 from P23.88 billion in 2021, driven by strong loan growth, higher net interest margin and lower provision for potential loan losses.

The bank's net income also included a one-off gain from a property sale in Makati City. Without the windfall, the earnings of BPI still soared by 50.2 percent to P35.9 billion

Limcaoco said the bank started the year strongly in the first three months of the year. 'First quarter was good,' he said.

Limcaoco said the rosy outlook was based on the projected mid-teens growth in loan disbursements this year despite the series of aggressive rate hikes delivered by the Bangko Sentral ng Pilipinas (BSP) to tame inflation and stabilize the peso.

The BSP has so far raised key policy rates by 425 basis points, bringing the benchmark rate to a 16-year high of 6.25 percent from an all-time low of two percent.

'Loans remain to be resilient. We've told people that we expect loan growth this year to be mid-teens. There's still demand so far,' he said.

According to Limcaoco, Philippine business are used to historically high rates as it was only during the COVID-19 pandemic that interest rates fell to record lows.

In 2022, BPI's loan book grew by 15.3 percent to P1.7 trillion from P1.48 trillion in 2021 led by growth in the credit card, corporate or small medium enterprises (SMEs) and auto portfolios of 31.1 percent, 15.5 percent, and 14 percent, respectively.

Despite external headwinds brought about by higher inflation and interest rates, Limcaoco believes that BPI's non-performing loan (NPL) ratio will continue to improve.

'NPLs are steady and we believe its heading down, driven by better performance of existing loans and new loans so denominator is going down,' he said.

BPI's asset quality continued to improve with the NPL ratio declining to 1.76 percent last year from 2.49 percent in 2021, while the NPL coverage ratio rose to 180.1 percent from 136.1 percent.

He said the bank is still finalizing the amount of provision for probable loan losses for this year after dropping by 30.2 percent to P9.2 billion from P13.13 billion.

Limcaoco said BPI is allocating about P14 billion for the bank's information technology-related spending this year, of which about P500 million would be used for cybersecurity alone.

 

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