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Banks' 2003 profits higher than expected |
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(04 February 2004, Wednesday - Philippine Daily Inquirer)
By Doris C. Dumlao AFTER a lackluster performance in 2002, Philippine banks saw a significant recovery in net profits last year on the back of higher interest earnings and treasury gains. |
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In earnings growth, the best performers among publicly listed banks that have reported profits so far were Banco de Oro Universal Bank of mall tycoon Henry Sy and the Aboitiz group's Union Bank of the Philippines, which posted 43 percent and 40 percent increases in net incomes in 2003, respectively.
The biggest bank in assets, Metropolitan Bank and Trust Co., also reported a 2003 profit of 3.02 billion pesos, about 20 percent better than the 2.51 billion pesos it reported in 2002. Its subsidiary, Philippine Savings Bank, reported a 33.6-percent growth in profit to 403.6 million pesos. Second biggest in assets, Bank of the Philippine Islands reported a 10-percent rise in profit to 5.7 billion pesos, the highest in the industry. Medium-sized Security Bank Corp. and Chinatrust (Philippines) Commercial Bank Corp. also recorded growths in 2003 profit of 24 percent and 22 percent, respectively. Equitable PCI Bank estimated that its earnings last year surged by at least 20 percent, or better than the expected 10 percent. The big rise in the banks' profits is due to " a combination of factors," Unicapital Securities research head Eric Claudio said. "One is the recovery from the previous year's poor performance. Also, most banks made a lot of money from non-lending activities -- treasury functions -- and the rising interest rates and volatile exchange range helped them." Claudio said the public rather than the private sector gobbled up most of the lending growth last year. This year, the banks are expected to benefit from wider margins arising from interest rate increases. "But the thing is, the banks might sacrifice potential income from lending," Claudio said. "Lending growth is not yet recovering in a big way." Metrobank's interest income in 2003 amounted to 22.88 billion pesos against interest expenses of 13.79 billion, while provisions for probable losses amounted to 2.6 billion pesos. Other income amounted to 11.1 billion pesos, against other expenses of 14.57 billion pesos. Banco de Oro, which is buying the controlling stake in Equitable PCI Bank, said its net interest income surged by 55 percent to 3.5 billion pesos but other income dropped by three percent to 2.38 billion pesos. In 2002 Banco de Oro booked one-time gains from the sale of secondary shares during a public offering of shares in May that year. Union Bank benefited from capital and treasury-related businesses, private banking, cash management services, and consumer banking. home | latest news |
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