BDO Unibank Inc.’s net income increased by 7 percent to P19.7 billion in the first quarter as the ratio of non-performing loans to gross loans and non-interest income improved.

In a report to the Philippine Stock Exchange on Friday, BDO said its profit improved from P18.5 billion in the same quarter of 2024.

The bank said the growth reflected higher gross customer loans at 12 percent to P3.3 trillion, while the non-performing loans ratio slightly declined by 0.1 percent to 1.77 percent.

BDO president and chief executive officer Nestor Tan said loans could remain robust this year, mainly due to business loans, while borrowings from individual clients remain steady.

“We put on hold capital expenditures during the pandemic, and we have not seen them normalizing because after the pandemic, we had the Russia-Ukraine crisis, which affected commodity prices and interest rates,” he said Friday at the bank’s annual stockholders’ meeting at Conrad, Pasay City.

Tan said the bank’s net income growth for the full year might slightly decline below the 12 percent posted in 2024 as he projects the Bangko Sentral ng Pilipinas (BSP) to impose two more policy rate cuts this year by 50 basis points (bps).

Since April last year, the BSP has slashed its benchmark interest rate to 5.5 percent by 100 bps as inflation rates generally fell.

Given the higher gross loans, net interest income grew by 6 percent.

Non-interest income for the first quarter, however, rose faster by 21 percent after BDO acquired a 50 percent stake of the Keppel Group in SM Keppel Land to fully develop and operate the office and commercial properties at The Podium West Tower and The Podium Mall in Ortigas Center, Mandaluyong City.

“The strong performance of fee-based income fueled this,” Tan said.

Deposits grew 6 percent, mostly consisting of current and savings accounts, which had a low savings rate and a 70 percent share of the total deposits.

Operating costs jumped by 15 percent as the bank opened 70 more branches last year.

Given the robust figures, return on average common equity hit was at 13.8 percent.

Protection from global risks

Tan said Trump’s tariffs will have a softer impact on the local economy as the Philippines heavily relies on services and domestic consumption, not on revenues of exported goods.

“We don’t have a good manufacturing base, so I think the tariff will generally have an impact on us, but not as much as the other countries, based on what we know now. As long as economic activity is strong, banks will do well,” Tan said.

He added BDO has been placing loss mitigation measures to minimize the impact of possible higher bad loans due to the unpredictable global economy.

Tan said this as he recalled lessons from the 1997 Asian Financial Crisis, the 2007 Global Financial Crisis, and the Covid-19 pandemic.

“We expect the worst. Those three crises will happen again but we just don’t know what will start it, so we have much higher provisions than our competitors,” he said.

The bank set aside provisions of P3 billion in the first quarter, which is lower than the P3 billion set aside in the same period last year.