BDO Unibank Maintains Positive Outlook Amid US Tariffs
BDO Unibank Inc., recognized as the largest lender in the Philippines, anticipates continuing its trend of record revenues this year, rooted in the overall expansion of its lending portfolio. The bank’s CEO aims to reassure investors regarding the implications of US tariffs on operations.
“It’s not ideal. Not what we want, but we can manage,” CEO Nestor Tan mentioned in an interview with Haslinda Amin on Bloomberg TV, addressing the effects of US tariffs. He suggested that while the banking sector could experience some slowdown, it may not be significantly impacted.
This month, Washington initiated 19% tariffs on goods from the Philippines, similar to those imposed on many neighboring countries.
For context, BDO, owned by billionaire Henry Sy’s family, reported a net profit of 40.6 billion pesos (around $710 million) in the first half of the year, showing a slight 3% increase from the same period last year. Profits for all of 2024 climbed 12% to a new high of 82 billion pesos.
Following a 2.1% drop on Tuesday, BDO shares rebounded on the Philippine Stock Exchange Index, with the stocks experiencing an overall decline of 1.4% this year.
Tan emphasized the importance of a stable geopolitical landscape and strong macroeconomic indicators for attracting investors to the Philippines. He predicts BDO’s revenue will see low double-digit growth in the current year.
“We’re focusing on two main aspects. First is stability, which we’re seeing gradually improve. Second, it’s about a more favorable interest rate environment,” noted a bank executive. They expressed hope that Banco Central Ng Pilipinas would reduce its main interest rates twice more this year.
Tan acknowledged, however, that lower interest rates might negatively impact margins, with expected yield decreases. Nevertheless, he remains optimistic that a reduction in capital expenditure lending would begin to rebound, potentially balancing out the margin compression.
Last month, BDO successfully raised P115 billion through 1.5-year bonds, marking one of the largest corporate bond sales in Southeast Asia. Tan mentioned this was part of the bank’s approach to fundraising, and he intends to monitor the bank’s return to the bond market next year.
The government has revised its economic growth target to a lower 6.5% this year, down from the previous goal of 8%. BSP Governor Eli Remolona indicated that financial authorities have room to continue easing policy next year, following two more quarter-point reductions in 2025.
