Bank of Commerce (BankCom) posted a 14% year-on-year increase in second-quarter net income, driven by its core banking operations and foreign exchange gains, the San Miguel Corp. affiliate said in a stock exchange disclosure on Monday.

Net income for the three months through June reached P1.13 billion, up from P993.91 million in the same period a year earlier. For the first half, net income rose 13% to P2.11 billion from P1.86 billion, translating to a return on equity of 11.56% and a return on assets of 1.47%.

"Despite the prevailing market and geopolitical uncertainties, BankCom's strong first-half results demonstrate its resilience and the confidence of its growing customer base," the bank said. "The double-digit earnings growth was underpinned by the robust performance of its core banking business complemented by foreign exchange gains from client-driven transactions."

The bank's financial statement was unavailable as of press time.

Net interest income climbed 18% to P3.13 billion in the second quarter, up from P2.66 billion a year prior. For the first half, net interest income grew 19% to P6.11 billion from P5.15 billion.

"The increase was driven by strong contributions from the bank's lending activities and investment securities portfolio, owing to higher average daily levels, along with lower cost of funds despite a challenging interest rate environment," BankCom said. "The wider spread between the growth of revenues from interest-earning assets and the cost of interest-bearing liabilities contributed to a record high net interest margin of 4.68%."

Other non-interest income increased 17% to P480.88 million in the second quarter from P409.43 million a year ago. For the first semester, other income reached P785.38 million, supported by an 18% rise in real and other properties acquired (ROPA) sales-related gains to P340.69 million and a 6% increase in foreign exchange gains from client-related transactions to P109.58 million.

"These revenue sources along with fee-generating activities mitigated the impact of trading losses arising from market volatility stemming from geopolitical tensions in the Middle East," BankCom said.

Gross revenues advanced 18% year on year to P3.61 billion in the second quarter and 14% to P6.9 billion for the first half.

Operating expenses, excluding provisions, rose 14% to P2.07 billion in the second quarter. For the first six months, operating expenses totaled P4.05 billion, up 13% from P3.6 billion in the same period last year.

"The increase reflects BankCom's continued strategic investments in human capital, branch lites, technology, and other business expansion initiatives," the bank said.

Provisions for credit and impairment losses were set at P7.98 million as of end-June, down 13% from a year earlier.

The bank's total loans and receivables stood at P153.56 billion, accounting for 53% of total assets. The gross nonperforming loan (NPL) ratio was 1.43%, while the net NPL ratio stood at 0.63%.

Total deposits reached P223.64 billion at end-June, of which P202.59 billion comprised low-cost current and savings account (CASA) deposits and P21.05 billion were time deposits, yielding a CASA ratio of 91%, among the highest in the Philippine banking sector. The loan-to-deposit ratio was 70%.

BankCom's total assets stood at P287.51 billion at end-June, with total capital of P36.37 billion and a capital adequacy ratio of 17.07%, well above the Bangko Sentral ng Pilipinas' regulatory minimum. The central bank delivered its first rate cut of the current easing cycle in August, lowering its benchmark to 6.25% from 6.5%.

The bank's shares slipped by two centavos, or 0.19%, to close at P10.48 each on Monday. — Aaron Michael C. Sy