Bank of Commerce Reported a Record High Net Income of PHP 2.8 Billion in 2023, Up 56%

Bank of Commerce (BankCom), an affiliate of San Miguel Corporation (SMC), announced a record-breaking P2.8 billion in net profits for the year 2023. This is a 56% increase over the P1.8 billion the previous year.

The return on equity at the end of 2023 was 9.52%, up from 7.01% the year before and more than double the 4.22% ROE listed in the bank's IPO prospectus.

The bank's core lending operation saw an increase, which supported its record-high profit. Year over year, net interest income increased by P1.61 billion, or 24%. There was growth in every lending category.
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Due in large part to the bank's income from its credit card, trust, and investment banking operations, service charges, fees, and commissions also increased.

FY2023 Highlights

• FY Net Income P2.8 billion, 56% increase from last year’s P1.8 billion and the highest since 2008.
• Gross Revenue grew by 23% to P9.98 billion from the P8.12 billion in 2022.
• Net Interest Income rose to P8.3 billion, up 24% from 2022’s P6.68 billion.
• Other income posted to P1.68 billion, 17% higher than P1.43 year-on-year.
• Total Loans and Receivables, accounting for 47% of total assets, maintained a steady growth amounting to P109.57 billion from P105.09 billion last year.
• Investment Securities nearly doubled to P11.44 billion from P6.19 billion in 2022.
• Total Capital funds grew by 10% year-on-year to ₽30.85 billion, translating to a CAR of 19.88%, well above the minimum regulatory requirement .

Key Events
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• IBG deals – BankCom takes pride in being a catalyst for capital-raising solutions. It has taken part in a series of high-impact projects crucial to nation-building, of which two (2) transactions bagged awards at the 17th Annual Best Deal &Solutions Awards 2023 spearheaded by Alpha Southeast Asia, a Hong-Kong based institutional investment publication.

Awards

1. Best PPP & Blended Financing Infrastructure Deal of the Year – Joint Lead Arranger of the P100 billion Syndicated Term Loan Facility for SMC Mass Rail Transit 7, Inc. (MRT-7).
2. Best Local Currency Bond Deal of the Year in the Philippines – Joint Lead Underwriter & Joint Bookrunner of the P60 billion Fixed Rate Bonds by San Miguel Corporation.

 

• November 2023 – tapped Infosys Finacle, a global leader in banking technology, to help accelerate the bank’s digital transformation and redefine banking experience for customers.
• December 2023 – successfully re-fleeted ATM network with advanced security and user-friendly features (commenced in July 2023).
• December 2023 – launched Japan remittance business.

4Q2023 Highlights

• 4Q2023 Net Income posted P791.07 million, up 87% from 3Q owing to higher revenues from the lending business, investment securities and fees from IBG deals. This is also more than 2x the P311.58 million in the fourth quarter of 2022.
• Gross Revenue grew by 17% to P2.68 billion, up from the P2.29 billion in 4Q2022.
• Net Interest Income increased to P2.22 billion, 19% higher than the P1.86 billion in the same quarter last year.
• Operating Expenses excluding provisions, amounted to P1.83 billion, up from P1.59 billion in 3Q 2023 and P1.54 billion in 4Q 2022, on account of higher compensation, taxes and licenses and fees and commission due to the increase in income generating activities of the bank.

The total income recorded in 2022 was P8.12 billion, but it increased to P9.98 billion, or P1.86 billion, or 23% more. This was mostly caused by the steady increase in trading gains, ROPA-related earnings, service charges, fees, and commissions, as well as net interest income. 
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Due to the strong increase in interest on loans, receivables, and investment securities as a result of higher rates, net interest income was P8.30 billion, or 1.2 times what it was at P6.68 billion the previous year.

The amount of other income was P1.68 billion, which was 17% more than P1.43 billion in the previous year. An increase in service charges, fees, and commissions of ₽886.38 million drove the upward growth. These are due to the bank's considerable revenues from investment banking transactions in 2023, the resurgence of its trading and investment securities division, and an increase in profits from the foreclosure and sale of homes, equipment, and other foreclosed assets.

On the strength of an increase in loans and investment securities, total assets increased by 7% to P231.67 billion from P217.52 billion the previous year, resulting in a ROA of 1.25%.

Total loans and receivables registered P109.57 billion, up P4.47 billion from P105.09 billion last year, mainly due to higher corporate loans. This resulted to a loan-to-deposit ratio of 70%. Net non-performing loans ratio at end-2023 was at 0.44% from 0.60% in 2022, reflecting strength in asset quality due to the bank’s focused risk appetite. Meanwhile, gross NPL ratio was at 1.54%, better than the industry average of 3.23% as of December 2023. This is also an improvement from the 2.10% at end-2022.
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Deposits, which make over 80% of total assets, increased by P9.64 billion to P185.91 due to a P164.24 billion, or 7%, increase in CASA.
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As of December 31, 2023, the bank's capital funds were P30.85 billion, 10% more than P28.03 billion recorded the previous year. This increase was mostly due to the bank's outstanding performance and reinvested earnings. Furthermore, the bank's Tier 1 and CAR remained robust at 19.09% and 19.88%, respectively, and were much above the minimum regulatory requirements of 7.5% and 10.0%.