BDO to remain cautious amid risks

MANILA, Philippines — BDO Unibank Inc., the country’s largest bank, will remain cautious this year despite strong profit growth in 2023 and in the first quarter of the year.

In a press briefing, Nestor Tan, president and CEO at BDO Unibank Inc., said  the bank’s guarded optimism stems mostly from external risks in commodity prices amid geopolitical tensions, citing the conflict in the Middle East and its impact on global oil prices.

“As we look toward 2024, we see a stronger BDO in an improving economy. However, we have to remain vigilant given the country’s vulnerability to geopolitical shifts and external economic activity,” Tan said.

He said the BSP may likely move close or in lockstep with the US Federal Reserve as the interest rate differential between the two central banks may impact the foreign exchange market.

“Generally, we expect interest rates to go down and when things start to stabilize, we expect NIMS (net interest margins) to slightly decline because yields will go down. So that means we expect it to be flattish to slightly going down,” he said.

Tan said that if loan demand picks up in the latter part of the year, BDO will be ready for it.

“Number one is make sure that we have enough capital to support demand. Second is we cover more markets, bigger markets, bigger geographic reach, so that when the demand does come, then we have the inside track,” he said.

The net income of BDO rose by 12.2 percent to P18.5 billion in the first quarter from P16.5 billion in the same quarter in 2023 on the back of sustained growth across its core businesses.

Despite the aggressive rate hikes, Tan said BDO is projecting a nine to 10 percent increase in loan disbursements this year.

For the first quarter, the bank booked a 13-percent growth in gross customer loans, while the non-performing loan (NPL) ratio improved to 1.88 percent from 1.98 percent.

BDO’s NPL coverage ratio rose to 181 percent from 170 percent as it continued to maintain a conservative credit and provisioning policies.

Tan said BDO expects NPLs to remain under control and loan provisioning would be stable for this year. Credit quality will also likely improve.

The Sy-led bank is also targeting to put up 100 to 120 new branches nationwide. It will also continue to put in more investments in expanding its technology to better serve its clients.

“BDO will continue providing clients with the right banking solutions delivered through their preferred touchpoints, whether through physical branches or digital channels,” BDO chairperson Teresita Sy said.