BPI’s H1 income includes net gain through Create

THE Bank of the Philippine Islands (BPI) reported strong growth in its net income for the first half of the year, which the bank attributed to higher revenues and lower provision during the period.

The bank announced last Thursday that it was able to grow its net profit by 73 percent in the first half of 2022 to P20.4 billion.

BPI said the period’s result is inclusive of a net gain on sale of property and tax adjustments due to the Corporate Recovery and Tax Incentives for Enterprises (Create) Law (Republic Act 11534).

RA 11534 seeks to amend several provisions in the old Tax Code, with a central focus on lowering corporate income tax rates and rationalizing fiscal incentives to better attract local and foreign investments in the Philippines.

President Rodrigo Duterte signed Create into law on March 26, 2021, with a number of vetoed provisions. It was published in the BusinessMirror on March 27 and took effect on April 11, 2021.

BPI’s total revenues for the first half of the year increased by 19.8 percent to P57.6 billion. This was driven by the bank’s growth in net interest income of 16.2 percent to P39.3 billion on the back of 14.4-percent loan growth and a 15-basis point expansion in net interest margin to 3.46 percent.

The bank’s non-interest income was also up 28.4 percent to P18.3 billion as fee income increased 42.2 percent. This could have been larger, the bank said, if not slightly tempered by the notably lower securities trading gains which came off a high base last year.

On the other hand, total operating expenses for the first semester was P25.8 billion, higher by 7.3 percent compared to the previous year.

The bank said investments in technology was the main accelerator for the growth in expenses. Cost-to-income ratio was 44.8 percent.

In terms of provisions, BPI said it has recognized provisions of P5 billion for the first half of the year, a 23.1 percent reduction from the P6.5 billion booked over the same period last year.

It also reported an improvement in its non-performing loan 1.99 percent and NPL coverage ratio stood at 170.7 percent.

The sustained strong metrics in asset quality resulted in a continued decline in credit cost, to 66 basis points, towards pre-pandemic levels.