Bank of the Philippine Islands posted Net Income of P21.4 billion in 2020, a 25.7% decline from the P28.8 billion earned in 2019. Fourth quarter Net Income was P4.2 billion, a 37.4% decrease from last year’s P6.8 billion.
The decline in earnings was a result of the Bank booking P28.0 billion in provisions for loan losses for the full year 2020, as the economic slowdown leads to an increase in non-performing loans. This provision is 5.0x more than the P5.6 billion set aside in 2019.
The Bank’s year-end 2020 NPL ratio was 2.68%, with NPL Coverage ratio at 115.2%.
Total Revenues for the year increased by 10.5% to P101.9 billion. Net Interest Income grew by 10.2% to P72.3 billion, a result of a 5.8% expansion in average asset base supported by a 14-basis point expansion in Net Interest Margin to 3.49%. Non-Interest Income climbed to P29.7 billion, up by 11.1% versus 2019 levels, on higher securities trading gains. Fee Income fell by 5.0% to P19.5 billion. Total Operating Expenses in 2020 amounted to P48.1 billion, almost flat compared to the previous year. Cost-to-Income Ratio stood at 47.2%, an improvement from the 52.4% recorded in the prior year.
Total Loans as of December 31, 2020 was P1.4 trillion, a 4.6% decline year-on-year, primarily as a result of a slowdown in corporate lending. Notably, the mortgage and microfinance loan segments ended the year with moderate growth rates of 6.6% and 5.7%, respectively. Total Deposits increased to P1.7 trillion, up 1.2% year-on-year, as CASA growth of 16.6% offset a 33.2% reduction in time deposits. The Bank’s CASA Ratio was 79.6%, while the Loan-to-Deposit Ratio was 82.0%.
Total Assets stood at P2.2 trillion as of December 31, 2020, 1.3% higher year-on-year. Total Equity increased to P279.8 billion, translating into a Common Equity Tier 1 Ratio of 16.2% and a Capital Adequacy Ratio of 17.1%, both well above regulatory requirements. Return on Equity was 7.7%, while Return on Assets was 0.98%.
The Bank ended the year with all three major international Credit Rating Agencies reaffirming its Credit Ratings: S&P at BBB+ which is two notches above investment grade (same as the Philippine Sovereign), Moody’s at Baa2 which is one notch above investment grade, and Fitch at BBB- which is investment grade.