BPI eyes 15% profit growth if May elections go smoothly

The Bank of the Philippine Islands (BPI), the banking arm of the Ayala Corp. and the country’s third largest lender in terms of assets, said its net income could rise by up to 15% this year if the elections go smoothly. “If the elections are peaceful and orderly, we will have the opportunity to grow our net income by up to 15%," BPI President and CEO Aurelio R. Montinola III told reporters after the bank’s annual stockholders’ meeting yesterday. “If not, the we will be more cautious and stick with our usual 10% growth." Elections to select a new set of national and local officials will be held on May 10. It will be first time for the country to hold an automated exercise. Mr. Montinola said BPI, whose net income reached P8.52 billion in 2009, will increase loans to small and medium enterprises (SMEs) and consumers to drive up profits this year. “We will grow SME and consumer lending by 10 to 15%," he said. “As much as we would like to grow lending to... local conglomerates [faster than 5% to 10%], we know they are liquid and have access to the capital markets," he said. The BPI chief added that lending in the first quarter was strong. Lending, except to corporates, grew by 10 to 19%. “Business volume in the first quarter was surprisingly strong. There were many including us who thought people will be cautious with the elections coming up, but the mood seems to be positive," he said. “Anecdotally, one way of knowing the mood is based on the number of credit requests for additional facilities and additional term loans so people are already beginning to prepare for expansion moving forward." Mr. Montinola said BPI also plans to improve its capital adequacy ratio, which stood at 14.7% in 2009. “Right now we are conducting stress tests. If we go on our existing budget, we will have enough to take us into 2013 and still be above the regulatory minimum of 10%," he said. BPI shares closed at P45.50 apiece Thursday, cheaper by 50 centavos from the previous day. -- Don Gil K. Carreon, BusinessWorld