Bank of Commerce Reported P2.21 Billion Earnings in 3Q 2024, Up 10%

San Miguel Corporation (SMC) affiliate Bank of Commerce (BankCom) posted an unaudited net income of P2.21 billion as of 30 September 2024, up 10% year-on-year mainly due to higher revenues. This translated to a return on equity (ROE) and return on asset (ROA) of 9.27% and 1.26%, respectively.

The increase was driven by growth in its core business, mainly net interest income, alongside increase in fee income. Core business growth mainly came from expansion in corporate loans and program lending primarily to SMC ecosystem clients.

The bank’s strategy of improving its revenue streams and prudent spending resulted in a cost-to-income ratio of 62%.

BankCom’s strong revenue growth was mainly due to higher net interest income, service charges, fees and commission, and trading gains.

Net interest income increased to P6.76 billion, 11% higher versus the P6.08 billion recorded in 3Q 2023. The upward trajectory was due to the expansion in earning assets, primarily from corporate and consumer loans as well as financial assets at fair value. The faster growth in revenues from earning assets than interest bearing liabilities translated to an improvement in net interest margin (NIM) at 4.48%.

Other income was up by 5% to P1.28 billion, on the back of a 12% increase in service charges, fees, and commissions. The increase is attributable to a 59% surge in underwriting fees amounting to P143.27 million, representing 11% of total other income. The Bank also saw increases in trust, credit card, and trade finance fees. Moreover, trading gains posted a recovery totaling P134.75 million from last year’s loss amounting to P0.47 million.

The bank has maintained a prudent approach by setting aside P199.50 million as additional provision for credit and impairment losses even as asset quality improves. The charge is 10% lower than last year.

Operating expenses, excluding provision for credit and impairment losses, recorded P4.96 billion, up 15% from P4.33 billion in 2023. The expansion in operating expenses was driven mainly by the bank’s continued investment in human capital and technology as well as a higher volume of transactions.

Compensation grew by 20% to P1.93 billion due to an increase in manpower count and an improved retention program. Depreciation and amortization (IT related) amounted to P455.67 million, 33% higher compared to P342.20 million in 2023. Service fees and commissions amounting to P297.71 million and taxes and licenses of P828.99 million both grew by 21% and 12%, respectively driven by higher business transaction volume.

As of 30 September 2024, total assets amounted to P235.05 billion, translating to return on assets of 1.26%.

Total loans and receivables, accounting for more than 50% of total assets, expanded by 15% to P125.95 billion, driven by growth in all segments of lending. The steady growth in loans resulted to a loan-to-deposit ratio of 70%. Gross non-performing loans (NPL) and net NPL ratios were at 1.67% and 0.48% respectively, from 1.54% and 0.44% as of end-2023.

Financial assets at fair value summed up to P21.71 billion, almost 2x from the P11.44 billion year-on-year. This is mainly attributable to capital appreciation and purchases made in anticipation of the lower interest rate regime. Investment securities, on the other hand, declined by 27% to P38.17 billion on account of maturities that were not re-invested in government securities and instead deployed as loans for better yield.

Total deposits rose moderately to P188.56 billion, 1% up from last year. Broken down, total deposits comprise P164.39 billion current account savings account (CASA), P19.14 billion time deposits, and P5.03 billion long-term negotiable certificate of deposit (LTNCD).

Bonds payable was down by 13% to P6.52 billion due to the maturity of the P7.50 billion 2-year bonds on July 29, 2024. However, this was partially offset by the P6.57 billion bond offering on May 9, 2024.

BankCom’s capital funds remain strong at P32.76 billion, reflecting a 6% increase from the P30.85 billion in 2023 despite the payment of dividends on July 15, 2024. The Bank paid P0.2512 per common share amounting to P352.44 million.

The bank’s capital adequacy ratio (CAR) remained strong at 18.30%, well above the minimum regulatory requirement of 10.0%.

An affiliate of San Miguel Corporation (SMC) since 2008, Bank of Commerce is a publicly-listed universal bank focused on helping its clients, communities and conglomerate partners by delivering the best choice of financial services harnessing the strengths of the SMC Group. Bank of Commerce is identified by its logo bearing the SMC symbols of escudo and cloverleaf, and by the trademark license short name "BankCom" granted by the Intellectual Property Office (IPO) in 2020. BankCom traces its origins to the Overseas Bank of Manila which opened in Binondo, Manila in 1963.

​BankCom marked its 60th anniversary in 2023, ending the year with a record high net income of P2.8 billion, outperforming its full-year 2022 profit of P1.8 billion by 56%, the highest growth among listed Philippine banks. BankCom maintains a network of 140 branches and 267 automated teller machines (ATMs) as of September 30, 2024, strategically located nationwide.