BDO Leasing and Finance, Inc. (BDOLF) posted a two percent growth in gross revenues to P795 million in the first quarter (1Q) of 2019. However, margin compression resulting from the company’s short-term liabilities adjusting faster to higher interest rates vis-a-vis its lease receivables (which carry rates fixed for three to five years, dragged the bottom line to a net loss of P24 million from P90 million net income in 1Q 2018.

To mitigate the impact of higher funding costs, a portion of BDOLF’’s lower-yielding portfolio was sold, resulting in the 10 percent contraction in its loans and receivables portfolio to R30.9 billion. This transaction eliminated the negative spread on that portion of the portfolio, and coupled with the application of prevailing interest rates to new loan bookings and loan re-pricing of existing loans, should restore margins and improve the bottom line.

Moving ahead, the company will continue to capitalize on its Parent Company’s extensive market reach, strengthen client relationships, explore new and untapped markets, and implement balanced growth while maintaining asset quality. (PR)