Philippines’ Largest Bank Posts Rare Loss, Braces for Defaults

(Bloomberg) -- BDO Unibank Inc., the Philippines’ largest lender by assets, posted its first loss in more than a decade after bolstering provisions for bad loans due to the pandemic.

The bank said its net loss totaled 4.48 billion pesos ($91 million) in the three months ended June, compared with profit of 10.4 billion pesos a year earlier. It booked provisions of 22.4 billion pesos in the first half, in anticipation of potential delinquencies stemming from the coronavirus pandemic.

BDO joins Bank of the Philippine Islands in bracing for a wave of soured debts as the country faces its worst economic slump in decades following a lockdown to stem the outbreak.

“The provisions are anticipatory in nature, and meant to safeguard the balance sheet,” BDO said in a statement Monday. The gross non-performing loan ratio increased to 1.95%.

The loss shouldn’t be surprising after BDO disclosed the pre-emptive provisions last month, said Nicky Franco, head of research at Abacus Securities Corp. Trading gains totaling 6 billion pesos helped to curtail the red ink, Franco added.

It was the bank’s first loss since the third quarter of 2008, according to data compiled by Bloomberg.

BPI earlier this month set a provision of 15 billion pesos in the first half, driving its second-quarter profit down 25% from a year earlier.

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