Top Philippine bank likely to sustain record profit, CEO says
'It's not ideal, it's not what we want but we can live with it,' chief executive officer Nestor Tan said on US tariffs in an interview with Bloomberg Television's Haslinda Amin on Tuesday (Aug 12). 'I don't think the banking sector will be affected that much. Of course there may be a slowdown.'
Washington began imposing this month a 19 per cent tariff on Philippine goods, on par with most of its neighbours.
BDO, owned by the family of late billionaire Henry Sy, reported a net income of 40.6 billion pesos (S$914.7illion) in the first half of the year, up 3 per cent from a year ago. Profit rose 12 per cent to a record 82 billion pesos for all of 2024.
Shares of BDO, among the heavyweights in the benchmark Philippine Stock Exchange Index, edged higher after falling as much as 2.1 per cent earlier on Tuesday. The stock has dropped 1.4 per cent this year.
Tan said a stable geopolitical situation and macroeconomic indicators will be key for the Philippines to attract investors. He expects BDO's revenues to grow by low double-digit levels this year.
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'There are two things that we're looking at. Number one is stability and we're seeing that slowly happening. Second is probably a more benign interest rate environment,' the bank executive said. He expects the Bangko Sentral ng Pilipinas to further cut its key interest rates twice for the rest of the year.
'It impacts our margin negatively because the yields are expected to go down a few basis points,' Tan said. 'But we're hoping that with lower interest rates, capital expenditure lending will start to pick up, and that we hope the volume will offset for the margin compression.'
The bank last month raised 115 billion pesos from a 1.5-year bond, the South-east Asian nation's largest corporate bond sale. Tan said it's part of the bank's funding mix 'and when we expect rates to go down, we try to keep our liability short.' He sees the bank returning to the bond market next year.
The government is targeting lower economic growth of 5.5 per cent to 6.5 per cent this year compared with a previous goal of as much as 8 per cent. BSP governor Eli Remolona has said the monetary authority has room to continue its easing cycle next year after possibly two more quarter-point cuts for the rest of 2025. BLOOMBERG
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