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The Bank of the Philippine Islands (BPI) reported a net income of P2.8 billion for the second quarter of the year, an improvement of 17% from the P2.4 billion registered in the same period last year. It was likewise 4% better than the previous quarter’s net income.

Total revenues for the second quarter were P9.2 billion, 6.5% higher than the same period last year due to improvement in both net interest income and non interest income. Net interest income improved by 8.6% following an expansion of P79 billion in average asset base while non interest income was up by 3.3% on account of the doubling of the foreign exchange income, and higher fees and commission as well as securities trading gain.

Net income for the first semester amounted to P5.6 billion, 5% better than last year. This translated to a return on equity of 16.7% and a return on assets of 1.6%. Net interest income grew by 4% attributable to a 12% increase in average asset base. While foreign exchange income and fees and commissions registered strong growths of 73% and 10%, overall non interest income increased minimally on account of lower securities trading gains relative to last year.

Operating costs were up by 8% from last year on variable product related cost as well as premises related expenses. Impairment losses were slightly lower than last year at P1.2 billion.

The Bank’s core businesses remained solid with P771 billion in total resources, up by 7.3%. Deposits expanded by 12% to P632 billion driven purely by peso deposits. Assets under management reached P448 billion, 22% higher than a year ago. Together with deposits, total funds managed by the bank recorded a composite growth rate of 16% to P1.1 trillion. Net loans likewise grew by 13% to P352 billion as large corporates, SMEs and consumer loans increased by 13%, 14% and 16%, respectively.

Last July 28, 2010, the Executive Committee of the bank approved the rights offering of 307,692,307 common shares at a price of P32.50 per share. The rights offering will further strengthen the bank’s tier 1 capital position to enable the bank to support critical strategic initiatives especially with the expected better economic prospects of the country.

The rights shares will be offered to eligible existing holders of common shares at a ratio of one (1) rights share for every 10.555 common shares held as of the record date of August 5, 2010. Shareholders eligible to participate in the offer may place their orders for the rights shares from August 9-13, 2010 through any BPI and BPI Family Savings Bank branches.

Commenting on the operating results of the bank, President Aurelio R. Montinola III said “We view the current business environment as positive from an Asian, Philippine, and Philippine banking perspective. We at BPI are particularly encouraged by our strong first semester operating and lending results, and we expect significant customer acquisition, continuing prudent lending growth, and deeper crosssell penetration of our client base. To balance this growth strategy with a buffer for future global market uncertainties, we are raising additional capital via a rights issue at this early stage.”

BPI received the Bangko Sentral ng Pilipinas' approval on June 23, 2010 for the payment of the Php 0.90 regular cash dividend for the first semester of 2010 on the Banks' outstanding common shares. In accordance with the BPI Board's resolution, the cash dividend is payable to all BPI common shareholders of record as of July 8, 2010 and payable to the said stockholders on July 23, 2010.

In compliance with the disclosure requirements of the Philippine Stock Exchange (“PSE”), we advise that during its regular meeting held on June 16, 2010, the Board of Directors of the Bank of the Philippine Islands (“the Bank”) approved a rights of offering of common shares to be offered first to certain eligible shareholders of the Bank (“Rights Issue”). The Bank expects to raise proceeds up to Php10.0 Billion from the Rights Issue.

Determination of the final terms and conditions of the Rights Issue, including the final issue size, discount rate, entitlement ratio, offer price, record date and other terms, has been delegated to the Bank’s management. The offer price and entitlement ratio recommended by the Bank’s management will be submitted to the Bank’s Executive Committee for approval. The Bank expects to complete the Rights Issue immediately after receiving the required regulatory approvals.

The Bank is conducting the Rights Issue in order to grow and strengthen its market-leading businesses and core franchises and to further solidify its industry-leading capital adequacy and financial strength. The Bank is of the view that the Philippine banking sector presents significant growth opportunities in the short to medium term and is preparing to seize these opportunities through: (i) increasing loans and other credit products; (ii) deepening and expanding customer relationships while developing new business segments; (iii) broadening the products and services offered to the Bank’s growing customer base; and (iv) evaluating and pursuing any inorganic growth opportunities as they arise. The Bank expects the Rights Issue to enhance its competitive
differentiation versus its peers in the market as it seeks to capitalize on opportunities in the banking sector, while also addressing market expectations for higher core equity levels for financial institutions globally. For the reasons outlined above, the Board of Directors considers this pre-emptive capital raise to be in the best interest of the Bank and its shareholders.

The Bank has appointed J.P. Morgan (S.E.A), Ltd. as Sole International Lead Manager and International Lead Underwriter and BPI Capital Corporation as the Domestic Issue Manager and Domestic Lead Underwriter for the Rights Issue.

At its regular meeting held on June 16, 2010, the Board of Directors of Bank of the Philippine Islands noted the resignation of Mr. Wong Ann Chai as Member of the Board of BPI and elected Mr. Khoo Teng Cheong as director of BPI effective June 16, 2010, to fill in the vacancy created by the resignation of Mr. Wong Ann Chai.

During its regular meeting held on May 19, 2010, the Board of Directors of BPI declared a regular cash dividend of P0.90 per share on the total outstanding common shares of the bank. This will be payable to all common shares stockholders of record as of the 15th day from receipt by BPI of the approval by the Bangko Sentral ng Pilipinas of the said dividend and distributable on the 15th day from said record date.

The Bank of the Philippine Islands (BPI) sustained the growth of its key businesses amidst firmer signs of a global economic recovery. Net income for the first quarter of 2010 reached P2.7 billion equivalent to a 16.6% return on equity and a 1.6% return on assets.

Total asset base went up to P695 billion, 8% higher than same period last year, as deposits expanded by 8% to P558 billion. Deposit growth came mainly from low cost peso deposits further improving the low cost float to bought deposit ratio to 57:43 from 54:46 at year end. Assets under Management further increased by 34% to P447 billion thereby increasing total customer funds managed of P1 trillion by 18% from a year ago. BPI Asset Management was named as the Best Onshore Fund Management House in the Philippines by the Asian Investor.

Net loans improved by 8% over the previous year with strong growth registered by various market segments: middle market at 20%, credit card receivables at 18%, small and medium enterprises at 15%, retail mortgages and auto loans at 13%. Local top tier corporates likewise posted an 11% growth but was overshadowed by the 17% decline in multinational corporate loans.

Total revenues was relatively flat at P8.9 billion despite a 54 basis points erosion in net interest spreads and weaker trading profits. Compensating for the drop in spreads was a P70 billion or 11% improvement in average asset base. On the non- interest income side, the P431M drop in securities trading profits was more than offset by increments in foreign exchange income, underwriting fees, profits from assets sold, trust fees, rental income and credit card income.

Operating costs were P4.8 billion, 6% over previous year due to higher premises, technology, advertising and regulatory costs. Impairment losses on the other hand was lower at P624 million. Income taxes were higher by P109 million relative to the taxable position of the bank.

BPI’s President, Aurelio R. Montinola III and Bank of the Philippine Islands recently won The Asian Banker Leadership Achievement and “Strongest Banks in Asia” awards. In The Asian Banker press release, the Council of Advisors of this award recognized Mr. Montinola’s pivotal role as the long-term leader of the Philippines’ best performing bank through balance sheet management and prudent risk management. They also cited Mr. Montinola’s steady focus in building out a strong cross-sell capacity through a successful remittance business and an industry-leading asset management division.

Commenting on the bank’s performance, Antonio V. Paner, Executive Vice President and Treasurer said: “We are pleasantly surprised with our first quarter 2010 results, as we did not originally expect to come close to our record first quarter 2009 results. Looking forward, assuming peaceful and orderly elections, we feel confident that BPI will sustain its profitable growth trend this year. This is consistent with our strategy of making BPI more accessible, more convenient, and more cost effective for more Filipinos.”

The Bank of the Philippine Islands (BPI) held its annual stockholders’ meeting on April 15, 2010 with its Chairman, Jaime Augusto Zobel de Ayala II, and President and CEO Aurelio R. Montinola III reporting on the bank’s performance for the year 2009.

Mr. Zobel, in his message, reported that amidst the volatility in the global financial system and a slowdown in the domestic economy, BPI turned in a net income of P8.5 billion in 2009, 33% better than the P6.4 billion posted in 2008. With a return on equity of 13%, BPI remained to be the most profitable bank among its peer banks. Capital adequacy ratio was 14.7%, comfortably above the BSP 10% minimum requirement.

BPI’s share price ended at P48.00, a 25% improvement over P38.50 at end 2008. Together with the regular cash dividend of P1.80 per share, total shareholder return amounted to 29% for the year. As the stock continued to trade at a premium with a price to book ratio of 2.3x, BPI’s market capitalization rose to P156 billion, still the largest in the banking industry.

Mr. Zobel also said that in defining BPI, sustainability issues and relevance to the communities the bank serves are among the important considerations. The bank is thus focusing on its social, economic and environmental impact as discussed in the bank’s 2008 Sustainability Report, the first report prepared along the Global Reporting Initiative in the Philippine banking industry.

The bank’s long term strategies are increasingly aligned with strengthening total customer experience, remaining relevant to the needs of its communities, expanding its market, and reducing its environmental impact. It has therefore forged partnerships to move towards providing better service to its customers while broadening its banking reach. These included expanding BPI Express Mobile to other mobile service providers to enhance existing partnership with Globe Telecom, catering to the needs of the Filipinos at the base of the pyramid with BPI Globe BanKO in partnership with Globe Telecom and Ayala Corp., pioneering Sustainable Energy Financing in partnership with the International Finance Corporation, and establishing a strategic bancassurance joint venture with Philamlife in BPI-Philam Life Assurance Corp.

Moreover, the bank’s Business Continuity Management program was tested and activated in the aftermath of typhoons Ondoy and Pepeng and worked according to its design. BPI’ s bank anywhere capability allowed its customers to transact in any branch as well as in its self service banking channels.

In his report, Mr. Montinola focused on BPI’s performance against 2009 plans which was hinged on its ‘Back to Basics’ deposit taking and lending approach. Low cost float to bought deposit ratio significantly improved to 54:46, and consumer, SMEs and middle market loans exhibited moderate growth. Overall asset quality likewise improved to 2.8% NPL ratio and reserve coverage increased from 71% to 86%.

The bank’s successful cross selling efforts delivered the increase in the credit card base and the take-up in the new products of the insurance companies. Credit card outperformed the industry in all fronts, becoming the second most used card and with market share improving to 16%.

Aside from servicing 26% of the country’s overseas Filipino remittances, BPI managed to grow the number of BPInoy depositors and their deposit volume. Other businesses of the bank which exhibited exceptional performance were asset management’s 50% increase in business volume, BPI Capital’s participation in major fund raising and advisory deals, Financial Markets’ management of bank’s balance sheet, and the popularity of the bank’s 24/7 banking channels.

For 2010, Mr. Montinola said that BPI will pursue a ‘Back to Basics’ 2010 theme as well as a ‘Redefining Opportunities’ additional thrust. It will continue to lend in a diversified manner; promote BPI as the place to save and invest and actively cross sell asset management, credit card and bancassurance; and train additional Relationship Managers and Lending Officers. It will also Redefine Opportunities by seeking additional customers from a broader, deeper market through its strategic partnerships and existing clients. Mr. Montinola’s ending statement was "We escaped a recession last year and we hope for orderly and peaceful elections this year. As the country grows, BPI will continue its Sustainability track and make itself more accessible, more convenient, and more cost effective for more Filipinos."

The Bank of the Philippine Islands (BPI) registered strong business volume and revenue growth in 2009. Full year unaudited net income rose to P 8.5 billion, 33% higher than 2008, and equivalent to a 13% Return on Equity and a 1.3% Return on Assets. Correspondingly, net income for the fourth quarter of 2009 was 7% better than 2008.

Unaudited total resources ended at P725 billion, 9% higher than previous year. Total funds managed by the Bank increased by P187 billion or 22% and now stands at over P1 trillion. Deposits expanded by 7% to P579 billion and assets under management increased by a hefty 50% to P439 billion.

Overall net loans grew only 2%, primarily due to multinationals paying down their loans by 22%. However, Credit Cards receivables grew 16%, SME loans 11%, consumer loans grew 10%, and local middle market names 9%. Clearly, multinational and top tier domestic lending were challenged by high liquidity and availability of funding through the capital markets.

Total remittances grew 15%, as against projections of an industry growth of 5%. BPI continued to capture over 20% of the overseas Filipino remittance business.

BPI also launched a Bank Anywhere capability by which a client can transact at any BPI branch and not be confined to their home branch. This, together with superior availability and reliability during Typhoons Ondoy and Pepeng, resulted in low cost deposit funds growing 20% during the year.

To extend market reach and refine its product suite, BPI implemented two joint ventures with strategic partners - BPI Globe BanKO, a mobile microfinance bank with Ayala Corporation and Globe Telecom; and BPI-Philam Life Assurance, Inc., a bancassurance platform with Philippine American Life Insurance Company.

Total revenues improved by 15% with increments contributed by both net interest and non-interest income. Net interest income was ahead by 10% on account of the 9% expansion in average asset base and a slight improvement in net spreads.

Non-interest income recorded a higher 25% largely on account of securities trading gain of P1.5 billion as against losses the previous year. Other income also exhibited positive gains from income from asset sales, rental income, income from insurance operations and various fees and commissions.

BPI set aside P2.5 billion in impairment losses, P605 million higher than a year ago. The BSP net 30-day non-performing loan ratio though fell to 2.8% and reserve cover further improved to 87.3%.

Operating expenses were 7% ahead of previous year due to manpower and premises-related expenses. Income taxes was P463 million higher than the previous year in view of the higher level of write-offs of deferred income tax on net operating loss carry-over (NOLCO).

BPI issued its first Sustainability Report for 2008 along the Global Reporting Initiatives (GRI) Sustainability Reporting Guidelines, the first in the banking industry. BPI was also recognized as the ‘Most Sustainable Bank, Philippines’ in the New Economy Sustainability Banking Awards 2009.

BPI President and Chief Executive Officer Mr. Aurelio R. Montinola III comments on the 2009 performance: "After all the doom and gloom at the beginning of the year, we are grateful that BPI had solid growth and earnings in almost all sectors in 2009. While there continue to be differing views on the strength of the recovery in 2010, we are confident that BPI will continue to serve its clients in a proactive financial advisory manner and be an innovative financial trailblazer in this new decade. With the global economic recovery under way, we expect BPI to even perform better in 2010."

BPI has received the Bangko Sentral ng Pilipinas' approval on January 27, 2010 for the payment of the Php 0.90 regular cash dividend on the outstanding common shares of the capital stock for the second semester of 2009. In accordance with the BPI Board's resolution, the cash dividend is payable on February 26, 2010 to all BPI common shares stockholders of record as of February 11, 2010.