The Bank of the Philippine Islands (PSE: BPI) delivered an unaudited net income of PhP11.3 billion for 2010, a robust 33% increase over the PhP8.5 billion recorded in 2009. This strong performance translated to a Return on Equity of 15.6% and a Return on Assets of 1.5%, an improvement from 13% and 1.3%, respectively, in 2009.
The significant growth in net profits was driven by a 13% increase in total revenues. Net interest income went up by 10% as the average asset base expanded by 12%. Non-interest income was better by 18% due to higher gains from securities trading, fees & commissions, and foreign exchange income.
Operating expenses increased by 6.5% due to higher premises costs, regulatory and variable expenses. Together with its strong revenues, BPI improved its operating efficiency to a 53.8% cost to income ratio from 57.2% in 2009. Impairment losses was PhP3.4 billion, 36% up from last year’s PhP2.5 billion inclusive of PhP274 million reserves for the goodwill on the Prudential Bank acquisition.
Total resources reached PhP877 billion, 21% higher than the previous year as deposits posted a 24% improvement to PhP720 billion. BPI introduced new deposit products to address the needs of its various markets.
Gross loans was PhP387 billion, a 16% increase from previous year, as all market segments sustained double-digit growths. Net 30-day NPL ratio further improved to 2% from prior year’s 2.8%, with a reserve cover of 109.2%.
BPI has the largest market capitalization among local banks of P210 billion as of end-2010. In August 2010, BPI raised PhP10 billion through a stock rights offering. Its Basel II Capital Adequacy Ratio (CAR) was at 15.45% at year-end with Tier 1 CAR at 13.86%. The Bank submitted its Internal Capital Adequacy Assessment (ICAAP) document to the Bangko Sentral ng Pilipinas (BSP) after a second dialogue with the BSP on the matter.
BPI’s partnerships with Ayala Corp. (PSE: AC) and Globe Telecom (PSE: GLO) in BPI Globe BanKO as well with The Philippine American Life Insurance Co. in BPI-Philam Assurance Corp. are performing well according to plan and are expected to further reach out to a broader customer base.
The Bank recently signed an agreement with ING Bank Manila to acquire the latter’s trust and investment management business in the Philippines. This acquisition, targeted to be completed within the first quarter of this year, will further strengthen BPI’s position in the industry.
BPI President and CEO Aurelio R. Montinola III said, “Despite anxiety over the global banking environment at end 2009, 2010 proved to be a good year for the banking industry and for BPI in particular. We had solid business results, as evidenced by our double digit business volume growth, our second consecutive 33% net income growth and our second Sustainability Report.
BPI has evolved from a self declared C-level to a B-level Sustainability Report which revolves around making BPI more accessible, more convenient, and more cost effective for more Filipinos.
We approach 2011 with a positive outlook for the country, but remain watchful of potentially troublesome global economy contagion effects on the Philippine banking industry.”