MANILA (UPDATE) -- BDO Unibank's net income climbed to P19.7 billion in the first quarter of 2025, up 7 percent from the same period in 2024, because of sustained growth across its core businesses.

The bank said net interest income increased by 6 percent to P47.6 billion as earnings assets grew.

Loans, meanwhile, jumped 12 percent to P3.3 trillion. Consumer loans expanded by 17.3 percent, corporate loans by 8.7 percent, and middle market loans by 12.7 percent. Despite this, BDO's non-performing loans ratio further eased to 1.77 percent, down from 1.88 percent in the same period last year.

“This is where we see the impact of the tariff,” BDO President Nestor Tan said of the first quarter loan growth.

Tan noted that large corporate borrowings, which go into huge infrastructure projects and capital expenditures, are now down to single-digit growth.

“It was the driver before, in 2024,” he noted.

Tan noted, however, that companies are not abandoning investment.

“But with the tariff and all the actions happening, with Trump 2.0, some of them have opted to defer. So we do expect them to come in, but at the moment, they have not come in during the first quarter,” he said.

Deposits, meanwhile, went up by 6 percent to P38 trillion. Non-interest income leapt 21 percent to P18.6 billion because of n uptick in fee-based income. BDO's net income reached P82 billion in 2024.

Tan said he expects BDO’s loans to continue growing in 2025. 

“My view on loan growth is that you have a steady demand on the consumer side, in consumer side, but the real drivers will be middle market and large corporate,” he said.

“We put on hold a lot of capital expenditures during the pandemic, and we haven't seen them normalizing, because right after the pandemic, if you recall, with the Ukraine crisis, which affected commodity prices, affected interest rates and affected foreign exchange…most of those investments were put on hold,” he explained. 

“Towards the fourth quarter of 2024, we have seen the pipeline of capital expenditures increasing, so we do expect that they will continue,” he noted.

EXPANSION CONTINUES

Tan said the bank hopes to have 100 to 120 more branches this year, as he expects more growth from the underserved sector.

“So roughly about a third to 80 percent of our new branches will be with the network bank model going into the unserved or underserved areas. And the rest would be with the commercial bank in areas or municipalities that have grown to a certain level and now require more sophisticated products,” he said.

[According to] BSP data, and I believe this, roughly about 25 percent of our cities and municipalities still do not have a formal banking presence, and we see that every time we open a branch in a municipality, we're surprised at the reception we're getting.” 

Asked if tapping the underserved market will weigh on the bank’s non-performing loans ratio, Tan said, “You have an assumption that the underserved is poor. They're not. They just don't have a bank.” 

TARIFF UNCERTAINTY AND GROWTH

Asked how US economic policy will affect the bank’s performance, Tan said, “We don't know the final impact of the tariffs, because what we know now may not be what will actually happen, because it does change, but we are not a big exporter to the US.”

 “And we don't have a good manufacturing base, so we are a country of traders,” he added. 

“So basically, I think, generally, the tariff will have an impact on us, but not as much as the other countries,” he said. 

“I think banks should be able to manage through difficult times and through easy times,” Tan said. “So the challenge here is actually where to find growth.” 

“So that likely effect of the tariff wars and all of the uncertainty is that growth will slow down, but it doesn't mean that the economy will tank,” he noted.

Philippines sees possibilities in Trump's tariff push

Tan said he expects “good” Philippine gross domestic product numbers, but these will not yet be at pre-pandemic levels. He also sees inflation falling within the government’s target range, leading to 2 more rate cuts totaling 50 basis points.

He noted, however, that government investments may be hampered because of their debt levels. BDO is concerned about the volatility of exchange rates and interest rates as a result of what's going on in the US, the price increases in commodities because of tariffs, and the redistribution of the supply chain.

Tan stressed, however, that BDO’s loan book is not too exposed to volatile rates. 

“We are generally a peso bank, and we maintain a balanced book on the foreign exchange, and we lend only to dollar earners,” he said.

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