DBP sees 30% growth in income for first 4 months

The Development Bank of the Philippines (DBP) is projecting a more than 30-percent increase in net income in the first four months of 2002. From an impressive P646-million net earnings from January to April last year to over P800 million in the same period this year.

In the first quarter of 2002, net income was registered at P486 million after loan loss provisioning or P73 million over the target P413-million set earlier.

DBP president and chief executive officer Remedios L. Macalincag said in the press briefing that they expected the month of April to surpass the entire first quarter net earnings.

"The month of April actually did better than last quarter. We will make the formal announcements next week," Macalincag said.

Higher than expected earnings was attributed to better loan collections, and unexpected delays in the release of loans due to the inability of the project loan proponents to fulfill the project requirements.

The DBP president said they expect to surpass their full year income target of P1.95-billion based not only on the performance of the first four months of the year. The increased economic activities, higher loan demand and disbursement plus low non-performing loan (NPL) ratio likewise added to the government financial institutions (GFIs) optimism.

Meanwhile, total assets after March this year stood at P148.57 bilion while gross income rose to P1.21 billion or P94-million better than the P1.12 billion in February this year.

As of end of March, past due levels remained at a safe 13.85 percent.

Loan-loss provisioning covered 50 percent of its NPLs or roughly P500 million which is more than P300 million over the provisioning required by the Bangko Sentral ng Pilipinas (BSP). "We are a very prudent bank. We make sure that our coverage is beyond which is required by the BSP," Macalincag pointed out.

Another reason for the better than expected income results was that more than P50 percent of its loan portfolio goes to wholesale lending which registers high repayment ratios.

In turn, the DBP can easily tap official development assistance (ODA) funds from such agencies as the Asian Development Bank (ADB), the World Bank, the Norwegian Agency for International Development, the Japan Bank for International Cooperation (JBIC), the Nordic Investment Bank, and the German financial institution, the Kreditanstalt fur Wiederaufbau (KfW) Credit Line for Small and Medium Enterprises.

Total loan portfolio was P78.49 billion with the small and medium enterprises (SME) sector acconting for P20 billion.

Biggest among the program loans so far this year is the $500-million JBIC V loan. So far, the GFI has drawn only P100 million while another $150 million would be released this year after the fulfillment of certain conditions including the expansion of the project coverage.

The remaining $250 million is still available to the DBP. However, this may not be made available within the year.

Macalincag explained that the national government guarantees for funding is nearing its ceiling, and that there are other projects of other government agencies for financial institutions which require national government guarantees.

"We may have to wait awhile since government has to extend guarantees to other projects," the DBP president said.