Bank of the Philippine Islands (BPI), the financial arm of the Ayala group of companies, has continued to show strong performance after posting a P2.3 billion net profit during the second quarter, bringing its first semester profit to P4.3 billion. The bank’s second quarter profit, up 23 percent from P1.9 billion a year earlier, was driven by higher interest and fee-based incomes. As a result, the bank’s return on equity (ROE) also rose to 15.9 percent from 13.3 percent during the second quarter last year, while return on assets stood at 2 percent compared to 1.8 percent last year. BPI’s total assets amounted to P473.7 billion, of which total deposits comprised P366.9 billion. The bank’s total capital was at P55.9 billion. With a market capitalization of P108.8 billion, BPI is the highest capitalized bank listed in the Philippine Stock Exchange.
After disposing of P8.6 billion worth of non-performing loans (NPLs) last year, BPI again sold P2.4 billion worth of NPLs last July, thus improving considerably its overall financial condition. The recent sale of the NPLs brought down its year-to-date NPL ratio to 4.6 percent from 5.6 percent last year, making BPI one of the strongest banks in the industry.
On the ROPOA side (real and other properties owned or acquired), BPI managed to make a 26 percent increase in retail sales during the first semester compared to the same period last year. As of end-June 2005, BPI had sold over P998 million worth of foreclosed properties vs. P794 last year. To complement this in-house initiative, the bank is also planning to put some properties in south Luzon in the auction block.
As it celebrates its 154th year, BPI is pursuing an expansion strategy based on organic growth (growth from within) and mergers and acquisitions (growth through consolidations) to keep its market leadership. At present, BPI also leads in consumer banking through its thrift bank subsidiary, BPI Family Savings Bank, which holds the largest share of the market.
Last July 27, BPI signed a memorandum of agreement to acquire Prudential Bank, a medium size universal bank. This is BPI’s first acquisition since its merger with Far East Bank and Trust Company in 2000 and DBS Bank Philippines in 2001. Shortly before it signed the agreement to acquire Prudential Bank, BPI also offered to buy the semi-private Philippine National Bank, one of the major banks in the country. In view of its renewed financial strength, BPI has been on the lookout for some good acquisitions in order to bolster its position as a rising regional financial powerhouse.