Q2 2026 Bank of the Philippine Islands Earnings Call Transcript
Key Points
- Record pre-provision operating profit of PHP55.4 billion, up 11.2% year-on-year, driven by robust revenue growth across all business segments.
- Net interest income rose 12.5% to PHP80 billion, supported by a 12.4% loan growth and continued net interest margin (NIM) expansion to 4.7%.
- Fee income grew 18% year-on-year, with strong contributions from cards, wealth management, and transaction banking, partially offsetting the impact of waived P2P transfer fees.
- Asset quality remained stable with NPL ratio at 2.42% quarter-on-quarter, and NPL coverage improved to 93% (116% including surplus reserves), providing a strong buffer.
- Strategic initiatives are gaining traction: agency banking network expanded to over 7,000 partner stores, and BPI Wealth became the largest trust institution in the Philippines with PHP2.05 trillion in AUM.
- Capital position remains solid with CET1 ratio at 14% and CAR at 14.8%, supporting a 24% increase in cash dividends to PHP2.58 per share.
- Net income for the first half was flat year-on-year at PHP32.8 billion, as higher provisions (up 84% to PHP13.3 billion) offset strong revenue growth.
- Provisions increased significantly due to a more conservative macroeconomic outlook (MEV refresh), adding PHP2.7 billion to ECL requirements, which may not recur but could pressure future earnings if conditions worsen.
- SME loan portfolio showed a sharp rise in NPL ratio to 12.5%, driven by recent vintages and external shocks, requiring tighter credit underwriting and slower growth.
- Credit card and personal loan delinquencies increased, particularly among first-time borrowers and new-to-credit clients, leading to tighter credit parameters and moderating loan growth.
- Operating expenses rose 13.8% year-on-year, driven by manpower, technology, and volume-related costs, keeping the cost-to-income ratio at 46.8% and limiting near-term efficiency gains.
- The waiver of P2P transfer fees (effective July 2026) is expected to reduce fee income by approximately PHP1.1 billion annually, representing about 5% of total fee income.
Okay. Good afternoon, ladies and gentlemen, and thank you for joining us today. Welcome to BPI's earnings call as we go through the results of our performance for the second quarter and first half of 2026. I'm Haj Narvaez. I'll be your moderator for today's session. We are conducting this briefing in a hybrid format with our BPI speakers and panelists joining us from our headquarters at Ayala Triangle Gardens Tower 2 in Makati City, while many of our participants are also joining us remotely. I am pleased to introduce you to our speakers and panelists for this afternoon. TG Limcaoco, President and CEO; Eric Luchangco, CFO and CSO. They will be joined in the panel for the Q&A session by Tere Marcial, Head of BPI Wealth; Gin Go, Head of Consumer Banking; Louis Cruz, Head of Institutional Banking; Dino Gasmen, Treasurer and Head of Global Markets. We are also joined by the rest of the BPI leadership team in this call. This afternoon's agenda will begin with opening remarks from our President and CEO, TG Limcaoco, followed by our CFO and CSO, Eric Luchangco, who will walk you through the second quarter and
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