BANK of the Philippine Islands (BPI) is bullish on its consumer banking business and expects its loan portfolio to continue expanding despite rising interest rates due to faster inflation.
“We are seeing the economy mobilizing and we see this in our loan releases on the consumer side,” BPI Head of Consumer Banking and Executive Vice- President Maria Cristina “Ginbee” L. Go said at a virtual briefing on Monday.
Ms. Go said BPI’s regular housing loan releases are 48% higher than last year’s. She added that the bank’s auto loan releases are growing at 29%.
“These allow us to provide greater traction in the ensuing months as we continue to monitor the impact of interest rates in our loan books. However, we don’t think that the increase in interest rates will drastically change demand,” she added.
“I think we have to be watchful of inflation… We have to watch where interest rates might go to battle inflation,” BPI President and Chief Executive Officer Jose Teodoro K. Limcaoco said.
“We maintain a very conservative stance here at BPI. We are not reducing our provisioning that we started at the beginning of the year. We will continue to maintain that pace,” Mr. Limcaoco added.
The Bangko Sentral ng Pilipinas (BSP) has raised benchmark interest rates by a total of 125 basis points (bps) so far this year as inflation remains elevated.
BSP Governor Felipe M. Medalla last week signaled a hike of 25 or 50 bps at their Aug. 18 meeting, although he ruled out another off-cycle increase. The central bank had raised rates by 75 bps in a surprise move on July 14.
Headline inflation hit a near four-year high of 6.1% in June, bringing the first-half average to 4.4%, above the BSP’s 2-4% target and 5% forecast for the year.
The BSP expects the July reading to be in the 5.6-6.4% range. July inflation data will be released on Friday.
DIGITALIZATIONMeanwhile, BPI said it spent about P9 billion on technology in 2021, which included digital initiatives such as building customer engagement platforms and investments in cybersecurity.
The Ayala-led bank continues to focus on digitalization, customer obsession, and sustainability efforts as it celebrates its 171st year in the country this month, officials said on Monday.
“As the pioneer bank in the Philippines and Southeast Asia, BPI has developed a long and rich history of banking excellence. It is a testament to our unwavering commitment to maintain the deep trust our clients have placed in us by being prudent, innovative, and nurturing,” Mr. Limcaoco said.
“We also always continue to adapt in order to meet our customers’ changing needs and the demands of an evolving economy,” he added.
BPI Executive Vice-President and Chief Operating Officer Ramon L. Jocson said the bank’s spending on cybersecurity is at around 10% of its technology budget.
“We are spending a lot on cybersecurity because it’s a growing concern for us given the increased malware introductions in the system. The second reason is that with technology adoption, we see more clients who can potentially be victims,” Mr. Jocson said.
As of 2021, 4.9 million of its 8.46 million client base were enrolled in the bank’s digital channels.
BPI’s net income rose by 82.9% to P12.5 billion in the second quarter from the P6.8 billion recorded in the same period last year. This brought the lender’s net earnings for the first half of the year to P20.4 billion.
The Ayala-led lender’s shares declined by P2.95 or 3.17% to close at P90.05 each on Monday. — K.B. Ta-asan