Philippine-based BDO's 1H14 net income slides 22% to PHP11.1b

Due to anticipated weakness in treasury income.

Philippine-based BDO Unibank Inc (BDO) reported that its 1H14 net income slid 22% YoY to PHP11.1b.

According to a research note from Maybank Kim Eng, the bank's net income came well in line with expectations at PHP11.1b in 1H14, accounting for 49% of Maybank Kim Eng's full-year estimate, 52% of market consensus, and 48.5% of management guidance.

Earnings dropped 22% largely due to a well-anticipated weakness in treasury income. Further, trading and FX gains fell 62% to PHP4.2b from PHP11b in 1H13.

Here's more from Maybank Kim Eng:

The results implies 2Q14 net earnings increased 36% YoY and 1.9% QoQ to PHP5.6b.

Loan demand remains robust with 21% growth, boosting net interest income 21% YoY and 3% QoQ in 2Q14.

Deposits continue to post high growth at 35%. partially due to the unwinding of the Special Deposit Account in 2H13.

We expect growth to soften in succeeding quarters.

Loan-to-deposit ratio slightly dropped to 71% from 73% in 1Q14.

CASA generation was reportedly sustained as the bank added 17 new branches to total 832 YTD.

We expect to see better earnings growth in the next two quarters as treasury gains come off from its high base in 1H13.

The bank is clearly on track to meet its earnings target this year.

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