BDO provision charges predicted to decline 29% to PHP4b next year

Thanks to improved NPL cover.

According to Maybank Kim Eng, non-performing loans were steady at 19.4b with NPL ratio of 2.4%. NPL cover improved to 147.7% due to a 73% expansion in impairment reserves in 2Q13.

Here's more from Maybank Kim Eng:

We believe this provides the bank some buffer to lower provision charges next year, which we estimate to decline 29% YoY to PHP4b, providing additional boost to earnings.

Credit costs, per our estimate, will drop to 0.40% from 0.64% this year. Despite this, our reserve cover projection remains strong at 150.9% in 2014.