Bank of the Philippine Islands booked PhP15.01 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. This provision is 4.3x more than the PhP3.48 billion set aside during the same period in 2019.
This resulted in a Net Income of PhP11.68 billion for first semester 2020, a decline of 15.0% from PhP13.74 billion registered in the same period last year. The second quarter net income was at PhP5.29 billion, a drop of 24.6% from PhP7.01 billion recorded in the same period last year.
For the first semester 2020, total Revenues increased by 14.8% to PhP52.69 billion. Net Interest Income grew by 12.5%, reaching PhP36.40 billion on 5.9% expansion in average asset base supported by an 18-basis point expansion in Net Interest Margin to 3.55%. Non-Interest Income was PhP16.29 billion, an increase of 20.3% versus 2019, primarily from higher securities trading gains.
Operating Expenses for the first semester 2020 totaled PhP24.19 billion, slightly down by 0.3% from the previous year on lower premises, technology, and marketing and product expenses. Cost-to-Income Ratio was at 45.9%, lower than the 52.9% recorded in the prior year.
Total Loans as of June 30, 2020 reached PhP1.43 trillion, up 5.9% year-on-year, with growth recorded in microfinance, corporate, and consumer loan segments at 41.4%, 8.4%, 2.5%, respectively. Total Deposits increased to PhP1.76 trillion, up 6.3% year-on-year, driven by CASA deposits which grew by 11.8%. The Bank’s CASA Ratio was 71.8%, while the Loan-to-Deposit Ratio was 81.4%.
The Bank’s NPL ratio stood at 1.83% with NPL Coverage ratio increasing to 140.7% in June 2020 compared to 97.5% as of June 2019.
As of June 30, 2020, Total Assets stood at PhP2.26 trillion, higher by 5.8% year-on-year. Total Equity amounted to PhP278.81 billion, with an indicative Common Equity Tier 1 Ratio of 15.63% and a Capital Adequacy Ratio of 16.52%, both well above regulatory requirements. Return on Equity was 8.56%, while Return on Assets was 1.08%.
The Bank recently completed the offering for the BPI COVID Action Response Bonds (CARE), with a tenor of 1.75 years and a coupon rate of 3.05% 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. MSMEs have been significantly affected by the global pandemic and BPI recognizes that these enterprises, which account for a significant percentage of the country’s employment, are critical to the growth and recovery of our economy.