BDO Unibank, the country’s leading lender, saw a 10-percent year-on-year drop in first quarter net profit amounting to P8.8 billion, weighed down by trading and foreign exchange losses arising from turbulent financial markets.

“The core lending and depo­sit-taking businesses sustained their growth despite the imposition of the enhanced community quarantine (ECQ) in mid-March. However, weak capital conditions impacted on BDO’s investment portfolio and dragged the bottom line,” the bank said in a disclosure to the Philippine Stock Exchange on Friday.

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BDO reported that net interest income in the first three months amounted to P33 billion, up by 19 percent year-on-year, on stable margins.

The bank grew its loan book by 11 percent to P2.2 trillion on continued growth across all segments, although the ECQ had started to disrupt operations of clients engaged in the business of providing “nonessential” goods and services. Noninte­rest income declined by 39.5 percent to P9 billion.

“Weak capital market conditions resulted in unrealized mark-to-market losses in BDO Life’s equities and unit-linked portfolios, leading to consoli­dated trading and forex (foreign exchange) losses,” the disclosure explained.

On the other hand, fee-based businesses contribu­ted P8.1 billion in revenues, up from P7.33 billion last year.

Insurance premiums improved to P3.9 billion from P3.2 billion in the same period last year.

On the expenditure side, BDO’s three-month operating expenses were slightly lower at P26.8 billion from P28.3 billion year-on-year, attributed to the reduction in volume-related expenses and lower policy reserves related to unit-linked funds.

BDO set aside provisions of P2.3 billion as nonperforming loan (NPL) ratio was stable at 1.3 percent. For every peso worth of NPLs, the bank had provided a cover of P1.51 centavos.

“To safeguard asset quality, the bank has undertaken initiatives which include, among others, rapid portfolio reviews of clients and sectors highly affected by the impact of the ECQ, as well as reassessment of existing provisioning guidelines,” the disclosure said.

Total capital base increased to P372.2 billion, with capital ade­quacy ratio (CAR) and common equity tier 1 (CET1) ratio at 13.8 percent and 12.7 percent, respectively, both above regulatory levels and deemed sufficient to withstand near-term shocks.

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“The bank wishes to assure the public of its commitment to support its clients and to continue to service their requirements, while implemen­ting measures to safeguard the health and safety of its customers and employees amid the COVID-19 situation and ECQ,” BDO said.

“BDO believes that its strong business franchise and solid balance sheet make the bank resilient in the face of the ongoing COVID-19 health crisis,” it added.

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