DBP net income up 16% to P1.5-B in 1st 9 months

The January-September net income of the Development Bank of the Philippines (DBP) grew 16 percent to P1.5 billion this year, from P1.30 billion in the same period last year.

Before loan-loss provisioning, DBP had a net income of P3.9 billion. Total resources stood at P149.671-billion as of October this year, up by P12.502 billion or nine percent compared to the same period last year.

The DBP, one of two high performing government financial institutions (GFI), however expects full year 2002 net earnings to be lower than that of last year although better than 2000.

DBP president and chief executive officer Simon R. Paterno cited strong treasury earnings as one of the major contributors to the institution’s positive performance despite the country’s sluggish economic activity.

However, Paterno said provisioning for possible losses ate into its net earnings for the year.

"We were lower than last year due to an increase in loan reserves to protect its (DBP) capital strength for long term. We need to ensure that DBP as an institution is protected, and we will increase our loan reserves. This will provide DBP the cushion that will balance the additional risks it takes on as it pursues its development banking mandate."

Loan portfolio stood at P78 billion as of October, down P373 million compared to the same period last year. However, on a month-to month basis, loan portfolio grew by P2 billion from P76 billion recorded in September this year.

Total deposits stood at P35 billion, up P6.098 billion or 21 percent compared to P28.949 billion during the same period last year.

However, Paterno projects that total earnings would come up short compared to last year, but better than the performance of 2000.

DBP reported a net income of P1.84 billion last year, up from P1.46 billion in 2000.

The DBP president feels that the outlook for next year depends heavily on the first three months.

"Next year is unpredictable as a lot depends on external factors," the former investment banker said.

The global economic community remains wary over the prospects of armed conflict. Analysts said much also depends of how long the fighting will last.

"The first quarter will largely depend on whether there will be armed conflict in the Middle East and for how long it will last should one occur," they said. "We will most likely keep the size of our loan book similar to that of this year."

Paterno said another major external factor that will affect the Philippine economy is the US economy. A weak US economy will result in lower trade activities resulting in, among others, weaker loan demand.

Likewise, lower interest rates have weighed heavily on treasury earnings which in turn ate into its net earnings.