BDO Unibank remains optimistic about its performance outlook for the year despite economic challenges posed by the Middle East crisis.

At a Friday press conference ahead of the bank’s annual stockholders’ meeting, BDO President and CEO Nestor V. Tan said the bank posted a net income of P20.1 billion in the first quarter, up a modest 2 percent, adding that he expects growth to pick up as the year progresses.

“Although you will see the first quarter is a little weak—we think it’s a timing issue—but we should return to a double-digit growth trend for the rest of the year,” he said. “We continued our strategic investments, and they are now starting to yield benefits for us. In terms of asset quality, it remains strong.”

The country’s largest bank reported P20.1 billion in net income for the first quarter, up 2 percent from P19.7 billion a year earlier, as core businesses remained steady. Growth was supported by strong lending and operating performance, with loans expanding 16 percent year on year.

“A big portion of that is capital expenditure, which is good for the country,” Tan added.

However, higher provisions—funds set aside in anticipation of future losses—tempered earnings growth, as the bank built reserves in response to evolving geopolitical risks, particularly potential first- and second-round effects of the Middle East conflict, which Tan said the bank is closely monitoring.

“We’re concerned about what happens if this conflict continues, so we’re very diligent in monitoring problem accounts,” he said.

“As you saw earlier, spread compression affected earnings growth. Income grew a moderate 4 percent. A big portion of this is the capital markets and investment banking segment—it has almost dried up as a result of the conflict, so nobody wants to make big transactions,” Tan added.

Headline inflation accelerated to 4.1 percent in March, driven largely by elevated fuel prices and transport costs. The Bangko Sentral ng Pilipinas (BSP) now forecasts annual inflation at 6.3 percent—well above its 2 to 4 percent target range—as spillover effects of the energy shock spread to other goods and services. Analysts have noted the conflict’s impact on consumers, with Filipinos favoring liquidity and savings over consumption and investment.

Despite these headwinds, Tan remains confident that consumer behavior and the broader economy will recover or normalize by the second half of the year, citing “good business growth across the board” and “the strength of the BDO franchise.”

“The balance sheet is healthy, so we are in a good position for growth,” he said. “We believe conditions are good and sustainable going forward.”