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The Bank of the Philippine Islands story 2017

by Atty. Ignacio R. Bunye

Bank of the Philippines Islands (BPI) had many success stories in 2017 to tell its stockholders during the annual stockholders meeting held recently.

Efficient operations, prudent risk management and best-in-class risk-adjusted returns, just to mention a few. These, as BPI tried to achieve the optimal mix between growth, profitability and stability.

BPI Chair Jaime Augusto Zobel de Ayala (JAZA) told the stockholders who packed the Fairmont Makati Ballroom last April 19 that 2017 marked the end of a five-year period which saw the bank double in size while improving its risk matrix.

JAZA presented some of BPI’s operating highlights:
– The assets of the bank increased from almost a trillion pesos in 2012 to R1.9 trillion in 2017.
– Loans more than doubled in the last 5 years to R1.2 trillion in 2017, growing faster than industry.
– Prudence in expanding its loan portfolio resulted in improvement in an already high asset quality (1.29 % NPL).
– Net income of P22.4 Billion translated into areturn on equity (ROE) of 12.8 % and return on assets (ROA) of 1.3 %. Market capitalization was R426 Billion. All figures are among the highest in the industry.
– Efforts to improve balance sheet efficiency resulted in a loan-to-deposit ratio (LDR) of 77 %.
– Cost to income ratio of 54.3 % is the best in the industry.

JAZA attributed superiorresults in 2017 to the strong performance of core intermediation business and the provision of a complete range of services, from traditional banking to asset management, brokerage and insurance services.

BPI ended the year with revenues of P71 Billion (up 6.7 %), net interest income of P48 billion (up 13.4 %) and fees and commissions of 19.9 billion (up 15.6%).

Meanwhile, BPI’s subsidiaries and affilitates are front-runners in their respective fields, JAZA said.
– BPI Asset Management and Trust company is the second largest asset manager among banks in the country, and the most profitable.
– BPI Family Savings Bank is the largest thrift bank in the country.
– BPI-Philam is the fastest growing life insurance company in the whole country and already the third largest in premium income.
– BPI/MS is the most profitable among non-life insurance company in the country and the fourth largest in premiums written.
– BPI Century Tokyo Leasing is the fourth largest leasing company in the country.
– Global Pay is the second largest merchant acquirer in the country.

JAZA ended his report by announcing BPI’s stock rights offering (scheduled for listing on May 4) which will raise approximately R50 billion in new capital.

The current capital level is deemed commensurate to the nature and extent of the risks that the bank has taken.

“(However) …the larger capital base will allow BPI to continue to contribute to, and benefit from, the country’s growth, and in a manner that is accretive to earnings,” JAZA said.

(Disclosure: This writer is currently an Independent Director of Bank of the Philippine Islands and BPI Asset Management and Trust Company. )

(To be continued next week)