|
BANK of
the Philippine Islands, the nation’s largest by market
value, expects revenue growth to slow this year because
of lower trading gains.
“Revenues are challenged, that’s why we have to keep our
operating expenses flat,” president Aurelio Montinola
said in an interview after an annual shareholders’
meeting Thursday. “The first quarter has been one of the
most turbulent quarters, both from an economic point of
view and investment point of view. There are a lot of
challenges on the noninterest income side.”
Bank of
the Philippine Islands, also known as BPI, increased
profit 11 percent last year to P10 billion, helped by a
19-percent jump in earnings from foreign exchange and
securities trading.
BPI,
owned by Ayala Corp. and Singapore’s DBS Group Holdings
Ltd. is the most profitable among the country’s biggest
banks with a return on equity of 17 percent, Deutsche
Bank AG analyst Rafael Garchitorena said in a note to
investors on March 26. Return on equity measures how
effectively a firm reinvests earnings. Deutsche Bank has
a “buy” rating on the stock.
A lack
of confidence in credit markets and concern the US will
enter a recession led to a slide in higher-yielding
assets last quarter. The Philippine benchmark stock
index tumbled 17.6 percent, the peso fell 1 percent and
benchmark five-year government bond yields climbed
almost 0.75 percentage point.
“We are
glad that the first quarter is over,” Montinola told
reporters after the briefing.
Strong
growth in the bank’s other businesses may offset the
weakness in trading, Montinola said. The bank increased
lending 13 percent in the first three months of this
year, in line with its forecast of 12 percent growth,
Montinola said.
This
year, BPI plans to sell P3 billion to P5 billion of bad
loans and assets seized from defaulting borrowers. The
bank’s bad-loan ratio dropped to 3.5 percent last year
from 6 percent in 2006, according to its annual report.
Bad loans are those that are at least 90 days overdue.
Shareholders Thursday approved a 20-percent dividend
payout ratio and an increase in BPI’s capital stock to
P49 billion from P29 billion.
BPI
shares were little changed last year after surging 40
percent in 2006. The stock has fallen 6 percent this
year, compared with a 16-percent decline in the
benchmark Philippine Stock Exchange index.
BPI,
which bought smaller rival Prudential Bank in the fourth
quarter of 2005, is open to acquisitions to expand,
Montinola said. “If there are opportunities, we will
look at potential acquisitions.” (Bloomberg) |
