Tuesday, October 28, 2008

BDO Shares Down To P22.50

Despite claims from Philippine banks and companies that the recent collapse of the US investment bank Lehman Brothers has not affected their operations, here comes another casualty and this time it's the country's second largest bank.

With assets of P621.30 billion as of the end of 2007 brought about by its merger with Equitable Bank, BDO-EPCI is second only to Metrobank with assets worth P706.89. Banco de Oro's shares however plummeted by P7 yesterday bringing the bank's share prices down to P22.50.

Banco de Oro incurred a P1.3 billion loss during the third quarter due to its exposure to the Lehman Brothers which forced the bank to make some extraordinary provisions for some of its impaired assets which was originally pegged at P3.8 billion but already reached P4.28 billion. BDO admitted during last September's Senate hearings that its exposure to Lehman amounted to $134 million which was small compared to the bank's assets worth P700 billion.

The bank told a Senate hearing in September it had a $134-million exposure in Lehman Brothers but the amount was small compared to assets of more than P700 billion. However, the investment losses was aggravated by a contraction in BDO's foreign exchange gains, trading and service fees which dropped to P5.84 billion.

However, BDO said its balance sheet continues to remain strong with P743 billion worth of assets. This shows a 13.68% capital adequacy ratio which is way more than the regulatory minimum of 10%.

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