BPI turns cautious amid Middle East risks, profit up 1.7% in Q1

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April 21, 2026 | 12:00am

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) posted a modest increase in first-quarter earnings and signaled a more cautious stance for the rest of 2026 as geopolitical tensions in the Middle East threaten to dampen consumer spending and raise credit risks.

At BPI’s 2026 annual stockholders’ meeting media briefing, president and CEO Jose Teodoro “TG” Limcaoco warned that rising oil prices driven by the Middle East conflict could weigh on consumption, the main driver of the Philippine economy.

“We will have to be a little more cautious as we have to understand what the economic situation might turn out to be and how that will affect the consumer as well as the large corporates,” Limcaoco said.

He noted that prolonged increases in fuel prices could force households to reallocate spending toward essentials such as transportation and food, limiting discretionary consumption.

The bank reported a net income of P16.9 billion in the first quarter, up by 1.7 percent from P16.6 billion a year earlier and 4.9 percent higher quarter-on-quarter.

Growth was driven by sustained loan expansion, wider net interest margins and stronger fee-based income, translating to a return on equity of 14.3 percent and return on assets of 1.9 percent.

“Continued high prices will obviously cut into the ability of consumers to spend,” Limcaoco said. To mitigate risks, BPI said it would tighten lending standards and strengthen collection efforts.

Supported by broad-based growth across segments, BPI’s loan book expanded by 13.5 percent to P2.6 trillion. Retail lending outpaced corporate loans, with non-institutional loans rising 24.9 percent, driven by strong growth in business banking, credit cards and personal loans.

Despite the solid expansion, the bank acknowledged that asset quality pressures could emerge if economic conditions weaken.

“We do expect non-performing loans (NPLs) will rise,” Limcaoco said, citing the strong link between economic conditions and loan quality.

He added that BPI had taken a proactive stance by setting aside more provisions early in the year. The bank booked provisions of P5.5 billion in the first quarter, while its NPL ratio stood at 2.42 percent with a coverage ratio of 87.15 percent.

BPI head of consumer banking Maria Cristina Go said the impact of higher oil prices is already being felt across borrower segments.

On the consumer side, the bank is becoming “very defensive on our loan underwriting and evaluation,” tightening income requirements and monitoring borrowers’ repayment capacity as inflation erodes purchasing power.

Clients are also shifting behavior, favoring liquidity and shorter-term deposits while postponing big-ticket purchases. For small and medium enterprises, rising fuel and logistics costs are expected to compress margins and weaken demand.