Bank of the Philippine Islands' earnings down 16% to USD92m in 4Q15

Blame it on the trading income drop.

In 4Q15, earnings dropped 16.4% YoY to PHP4.4b (USD92m) as trading income fell 44% to PHP612m (USD12m).

According to Maybank Kim Eng, BPI’s FY15 income increased marginally 1.1% YoY to PHP18.23b, missing their estimate by 3.7% and consensus forecast by 7%. This translated to ROE of 12.3%, down from 13.7% in 2014. Loan growth of 9.1% was slower than the industry average of 13.1%, and significantly down from BPI’s 27% in 2014.

Here's more from Maybank Kim Eng:

We believe the slowdown in lending was due to the focus on margins and fees amid market volatility. Loan portfolio mix was maintained at 78% corporate and 22% retail. Net interest income expanded 11% YoY to PHP38.6b.

We believe BPI was able to achieve a slight QoQ NIM improvement. Deposits inched up 8.5% for a loan-to-deposit ratio of 68.2%, within industry average. Low cost CASA comprised 72.3% of total deposits.

Non-interest income was flat at PHP20.72b in 2015. Trading and FX gains were weaker than expected, falling 15.1% to PHP2.86b. This was partially offset by subdued growth in operating expenses (+6.4%). Costto-income ratio was kept at 53.7%, similar to 2014.

In terms of asset quality, the NPL ratio reportedly rose to 1.6% from last year’s 1.5% but went down QoQ by about 20bps. Reserve cover slightly improved to 110.2% from 109.3% in 2014. Capital remains adequate with CET1 of 12.7% and CAR of 13.6%.