BDO targets P12.5-B net income

MANILA, Philippines - The BDO Unibank Inc. (BDO) has set a net income target for 2012 of P12.5 billion, or 19-percent higher than the P10.5 billion income it earned in 2011.

Curiously, the bank’s net income also grew 19 percent last year and in 2010.

In the first three months of 2012, net earnings grew 15 percent to P2.8 billion from the P2.4 billion in the same period last year.

BDO president and chief executive officer Nestor V. Tan expressed optimism that the first quarter income results more than justified its full year target.

“Gross customer loans continued to expand by 23 percent year-on-year,” Tan added in a press briefing yesterday.

He said that targets would be achieved for 2012 as long as the loan growth rate would be the same as the first quarter, the public private partnership (PPP) programs gets of the ground, margin pressures would start to ease, fee-income would continue growing, and provisioning would normalize.

Target interest income is P57.8 billion, net interest income at P38.7 billion, and target interest expense of P19.1 billion. Non-interest income is eyed at P20.6 billion.

Another boost to strong growth is the capital to be raised from the $1-billion (approximately P43 billion) from its rights offer.

Tan said that the rights offer would answer the need for more funds to cope with strong loan growth, which grew by 23 percent last year, and is likewise expected to grow by the same rate this year.

The advisers to the rights offer are Citi, JP Morgan and Deutsche Bank, while participating adviser is the United Overseas Bank (UOB). The closing target for the rights offer will be between June and July this year.

The other reason is for fulfilling the anticipated capital building requirements of the Basel III capital framework.

Under the proposals shared by the Bangko Sentral ng Pilipinas (BSP) based on Basel III, the Tier 1 capital ratio would be increased from five to 10 percent. And the total capital adequacy ratio (CAR) ratio would be raised from the present 10 to 12.5 percent.

Tan said that strengthening of capital is likewise critical in anticipation of increased competition from regional players in 2015, upon the full implementation of the Asean Free Trade Agreement (AFTA).