BancABC income lines exhibit resilience
The only major detractor in the Bank’s performance was an increase in expected credit losses from the supportive measures extended to struggling customers and enhancements made to its credit provisioning models.
BancABC has weathered the pandemic relatively well – with strong resilience in its income lines as well as controlled operating expenses. The only major detractor in the Bank’s performance was an increase in expected credit losses from the supportive measures extended to struggling customers and enhancements made to its credit provisioning models. The Bank recorded a profit before tax of P124.9 million, 17 perfect lower than P150.6 million achieved during the prior comparative period.
Trading revenue saw 114 percent growth, which was supported by BancABC’s adequate capacity and focus, resulting in improved client activity with higher volumes and healthier margins. Net interest income (NII) increased by 2 percent to P422 million, while interest income declined by 4 percent compared to the prior year, on the back of the policy rate changes and reduction in the loans book. Non-interest revenue (NIR) of P122.7 million was slightly lower due to the decline in customer transaction activity linked to income and discounts granted as well as a reduction in lending.
Interest expenses saw a decline due to the lower interest rates. “We have made good progress in terms of managing our interest expenses and will continue to carefully manage the interest margins as we improve our funding mix and cost of funding,” said Ratang Icho-Molebatsi, Finance Director.
Total operating expenses were well-contained and only increased by 4 percent to P416 million. The majority of the cost increases can be attributed to the amortisation of capitalised projects in line with investments made into technology infrastructure in the past and new costs to support working from home arrangements.
Icho-Molebatsi commented, “Given the current market uncertainty, it is imperative for us to diligently manage costs in line with the environment, whilst maintaining a strong solvency position in order to ensure we have the sufficient capital to meet the Bank’s future growth prospects.”
BancABC remains strongly capitalised – the Bank’s unimpaired capital and riskweighted assets were P1.4 billion and P7 billion, respectively, at period end, resulting in a 21 percent capital adequacy ratio against a 12.5 percent regulatory requirement.