Banco de Oro projects 23% income growth this year

After doubling its income growth last year, Banco de Oro (BDO) Universal Bank is now looking to increase its earnings by a more modest 23 percent to P1.3 billion this year.

In 2001, the bank registered a net income of P488 million and P441 million the year before.

BDO president Nestor V. Tan said the bank’s optimism lies in the investments made the previous year both in capital, infrastructure and development, a primary reason its capital expenditure program has been trimmed down to a mere P350 million.

In the first three months of the year alone, the bank reported net income at P271 million or twice the amount recorded in the same period last year. Since the banking environment is generally stronger in the second half of the year, Tan said that "we are still on track to achieve our yearend targets."

BDO will be relying on the 15- to 20-percent growth in loans and twice the figure for deposits. Last year, net loans grew to P52.44 billion versus P38 billion in 2001.

The growth of the loan portfolio meanwhile will depend on growth in the bank’s consumer and corporate market. The corporate market will be serviced among others by its investment banking business sector, which has been strengthened with a P1-billion capital base.

The consumer market, both in deposits and loans, will be serviced by the full operations of its 185 branches nationwide. The expansion of its branch network stemmed from its acquisition of the branch licenses of First e-Bank with 60 branches.

It will also launch sometime in the second half of the year its credit cards tied up with MasterCard to increase its exposure in the consumer market.

But its positive thrust, however, may be stalled depending on how well its disposes of its P5.6 billion in bad assets and its P4.8 billion in non-performing loans (NPLs), which includes an undisclosed amount tied to the troubled Manila Electric Corp. (Meralco).

Tan said that the bank would set aside P450 million for loan loss provisioning this year after it reached a total of P1 billion last year. It had established recently BDO Realty for the purpose of managing and disposing of its bad assets. The bank’s property arm would initially rely on the expertise of affiliates SM Prime Holdings Corp. and SM Development Corp.

The two could initially provide expertise in handling property assets, and in the long-term could result, among others, in new malls since bulk of the foreclosed properties are located in Metro Manila.

Tan described some of the foreclosed properties as good for residential and industrial parks, and "pocket-development areas" in urban centers.