Net Income for the year rose to P3.2 billion, 56.3% better than the previous year. Return on equity was 12.4% while return on assets was 1.4%.
Net Interest Income reached P8.8 billion, 21.5% better than previous year. The bank’s strategy to improve funding cost is partly reflected in the lower interest expenses of P6.5 billion, a 19.3% drop from prior year.
With the improvement in Net Interest Income and increase in interest earning assets of P29.1 billion to P190.5 billion, the bank’s net interest margin reflected a 20 basis point increase from 4.8% in 2006 to 5.0% in 2007.
Impairment losses amounted to P942.5 million, lower by P806.9 million or 46.1% than the previous year based on the bank’s assessment of the fair value of its assets.
Other income reached P4.5 billion, 14.6% lower than last year’s P5.3 billion. Service fees and equity earnings posted increases but trading and securities, commissions, trust fees reported declines.
Operating expenses slightly went up by P17.4 million or 0.21% to P8.3 billion on the back of growth in operations with additional 7 branches and 43 ATMs.
Financial Condition
Resources at yearend stood at P239.1 billion, P15.4 billion or 6.9% ahead of the previous year. This was mainly driven by an P18.4 billion or 11.7% organic growth of deposits, which ended at P175.9 billion and a stronger capital base.
Capital, including minority interest in subsidiaries reached P29.0 billion, higher by P5.6 billion or 24.1% than previous year. The higher level resulted from the bank’s successful follow-on offering of common shares worth P5.7 billion in the 1st quarter of the year and current year profits, net of P1.1 billion cash dividend and P1.1 billion stock dividend payments. Capital adequacy ratio stood strong at 18.7% with the implementation of Basel II.
Loans, excluding interbank loans and net of allowance for impairment losses, grew by P17.8 billion or 20.3% to P105.8 billion, as both corporate and consumer lending volumes increased. The Corporate loan portfolio growth of 36.7%, though, contributed the bigger share of the increase.
Additional funding was also used to bolster Investment securities, which increased, by P5.7
billion or 9.6% to P64.6 billion. Non-performing loans (NPL) of P6.5 billion, net of P1.1 allowance for fully provided accounts, slightly increased from P6.3 billion. NPL ratio stood at 5.3% in 2007.
Investment property, gross of depreciation and allowance, decreased from P12.1 billion in 2006 to P9.9 billion in 2007 mainly through an SPV sale to New Pacific Resources Management worth P1.7 billion, 8 public auctions and negotiated sales. Investment property over total assets ratio improved from 5.4% in 2006 to 4.1% in 2007.
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