Online stockbroker Colfinancial.com said banks collectively grew their profit by 38.1 percent to P59.4 billion in the first quarter from P43.34 billion a year ago, as they benefited from a strong net interest income and non-interest income growth.
Colfinancial said majority of the banks it covers surpassed expectations, namely, BDO Unibank Inc., Bank of the Philippine Islands (BPI), East West Banking Corp. (EastWest), Metropolitan Bank and Trust Co. (Metrobank) and Philippine National Bank (PNB).
China Banking Corp. posted earnings growth within expectation.
Colfinancial said BDO and Metrobank posted higher than expected net interest income, while BPI, EastWest and PNB posted better than expected non-interest income.
At the same time, it noted that BPI had lower-than-expected provisions.
Colfinancial.com said banks, except for one, posted higher net interest income.
“Specifically, the sector’s net interest income rose by 23.4 percent, largely due to growth in the banks’ loan portfolios. This was also supported by net interest margin (NIM) expansion from BDO, BPI, EastWest, Metrobank, PNB and UnionBank and increases in the banks’ investment securities as they purchased higher-yielding assets,” it said.
“ Amongst the eight banks in our first line coverage, four — BDO, BPI, Metrobank and PNB — outperformed our forecasts while three — CHIB, EastWest and UnionBank — fell in line, and Security Bank trailed behind,” it added.
Colfinancial said bank lending continued to increase, although at a slower pace amid elevated interest rates and inflation concerns.
“Consumer lending was a notable driver of loan growth in the first quarter, outpacing corporate and middle market loan growth for most banks, as consumers’ revenge spending continued,” it said.
“Corporate and middle market loans also expanded as mobility restrictions were lifted and business activity picked up,” it added.
Colfinancial.com said the banking sector’s median loan growth was at 13.5 percent for the period, lower than the previous quarter’s 14.7 percent.
“This slowdown is in line with the latest BSP (Bangko Sentral ng Pilipinas) data which showed that the total loans of universal and commercial banks rose by 9.7 percent as of end-March, compared to the 12.9 percent increase as of end-December 2022,” it said.
Colfinancial said the banking sector’s median net income margin (NIM) was up by 5 basis points (bps) from a year ago.
“Moving forward, we expect the banks’ margins to remain around current levels as the central bank’s policy tightening takes a pause. We think that there is still potential for the banks’ NIMs to increase should the BSP push through with lowering the banks’ reserve requirement ratio (RRR) in the latter half of the year,” it said.
Provisions for soured loans by the sector grew by 20.4 percent.
“Nevertheless, the banks’ median credit cost has continued to move down towards pre-pandemic levels, coming in at 59 bps in the first quarter,” it said.
“Asset quality remained healthy in the first quarter as most banks reported flattish NPLs (non-performing loans) sequentially. As a result, the sector’s median NPL ratio inched downwards to 2 percent from 2.1 percent in fourth quarter 2022,” it added.
Colfinancial said banks’ NPL cover remains adequate at 118 percent.
