Good afternoon, and thank you for joining us. We would like to begin our briefing. If we are to look at the financial highlights, we reported net income of PHP 19.7 billion. That is a 7% growth year-on-year, translating to a return equity 13.8%. Loans continue to show strong double-digit growth, 12%. Our fee-based income growing even faster now at 26%. If you recall last year, our fee income was up 17%, and for the first quarter, we are running at even stronger, 26% growth. Asset quality likewise improved further from 1.83% year-end NPL ratio, we are down to 1.77%, and our coverage is stable at 140+%. Lastly, book value accretion maintained at the 12% range, and our CET1 ratio at 14.4% again gives us a strong capacity to support continued growth as well as a progressive dividend policy. Looking at our results.
NII was up 6% compared to last year, again, on the back of 12% loan growth. Margins, as mentioned earlier, fee income growing 26%, and this was driven by a combination of card-related fees, payments and settlements, wealth management, investment banking. Our income from insurance operations is down 3% year-on-year. The negative result is more the impact of mark to market on the securities portfolio of our insurance subsidiary. If we were to look at business as usual, premiums were actually growing at 15%, similar to the trend that we saw in the full year 2024. Provisions, slightly lower compared to last year. Again, as we see continued improvement in asset quality, this in turn allows us to scale back a bit on our provisioning, and that is equivalent to less than 40 basis points in terms of credit costs. Again, net income, PHP 19.7 billion.
For the balance sheet, 12% growth in the loan book. Again, as we saw, continued growth across all market segments. Our LDR at 85%. Again, this still gives us room to continue growing the loan book as the reserve requirement ratio is now down to 5%. The theoretical LDR could go as high as 95%. CASA ratio steady at 70%, 6% growth in CASA, 6% growth in deposits as well. Lastly, again, our capital accounts up by 12%. For the loan book, if you look at this growth, 12% growth as of the first quarter. For consumer, 17% growth. This is still faster than the pace that we saw last year for overall consumer lending. Consumer now accounts for 25% of our loan book. Again, if you recall last year, it was 24%. First quarter is now 25%.
For our funding side, CASA is up 6%. Our overall deposit is up 6% also. On the branching side, we opened 14 branches so far, nine from BDO Network Bank, five from the BDO parent bank. Non-interest income. Fee-based income comprises now 80% of our non-interest income. The basic change that we have done in terms of the non-interest income side is we have segmented fee income from insurance operations, and this excludes the insurance operations side. Fee contributes the biggest component at 80%, followed by miscellaneous and treasury. On the life insurance operations, again, as mentioned earlier, it is a negative growth compared to last year, but on a business going concern basis, we are looking at mid-teens growth in new business volumes. OpEx up 16%, similar to the trend last year.
The first quarter OpEx growth tends to be higher, but as the year goes on, you saw that we eventually ended up with about a 12% or lower double-digit growth in overall OpEx. For asset quality, the PHP 3 billion provisions translates to 38 basis points in terms of credit cost. As you can see on a quarterly sequential basis, the NPL ratio continues to improve and NPL cover steady above 140. If you look at our net income, PHP 19.7, 13.8% ROE. It is against the industry average of 12.4%. In terms of CET1 ratio, if you look at the parent, we are up to 14% already from 13.7% as of year-end. We continue to be capital accretive. Next. That allows us to support growth and also allows us to improve on our dividend payout.
We announced last Friday an increase in our quarterly dividends from PHP 1- PHP 1.10 per quarter starting the second quarter. The expectation is that for 2025, the total cash divs will be about PHP 4.30, which is about a 15% increase, and that is a 28% payout ratio, similar to what we paid out last. In terms of our macro outlook, we are seeing good GDP growth so far, but again, not quite back to pre-pandemic levels. We are still hoping that catch-up CapEx will eventually help push GDP back to the 6% level. However, the environment that we are seeing today, as mentioned earlier, is causing some companies to temporarily adopt a wait-and-see attitude or to hold back on CapEx expansion plans. Also, the other consideration is that government consumption is limited because of the fiscal position.
Now, the good news is that inflation continues to be well contained for us. We have seen BSP adopting a less restrictive monetary policy. They have implemented one policy cut so far. What is unknown, again, is how the eventual Trump tariff policies will pan out and how they will ultimately impact global growth. Directly, we do not expect that to impact the Philippines a substantial manner or in a material way, but it is the indirect effects that we are, I guess, more on the lookout for. Okay. In terms of our outlook, we remain cautiously optimistic. We see loan growth continuing at the low double- digits. Margins are steady, but I think there is continuing pressure on margins to come down, again, with the prospect of more policy rate cuts happening. On the fee income side, we are very encouraged by the stronger growth we are seeing.
We attribute this again to our continuing investments in market coverage, conscious cross-selling efforts by our branches in our various businesses. We are also seeing the strategic initiatives gaining good momentum, as we will show later in the case of BDO Network, in particular. On asset quality, NPL is stable to improving, and our provisions and earnings capacity are actually more than adequate to cover for unexpected losses. In summary, our growth again reflects the strength of our business franchise, the implementation of our strategies. We have multiple drivers in place to support sustainable profits and ROE. We have investments in technology, resiliency, and improved processes. In turn, these create temporary impact on our operating expenses. We have sufficient capital to support growth, absorb operating losses, and also lastly, we have earnings that are adequate to support a progressive dividend policy. That concludes our presentation.
At this point, we can open the floor to Q&A. Before we do that, can I ask my colleagues to please join me here up front? Coco, our Treasurer. Our CEO, Mr. Tan. Just in time for Q&A. Charles, the Head of our Institutional Banking. Rolly Tanchanco, the Head of our Consumer Banking. Cora Mallillin, the Head of our Branches. Arnold Bengco, our Deputy Treasurer, please join us here. We'd like to acknowledge also the presence of our Chief of Staff, Mr. Jerome Guevarra, and the Head of our Remittance Business, Ms. Geneva Gloria. Okay. We can now open the floor to questions.
Okay. Hi, good afternoon. I'm Katherine Tan from Investor Relation. I will be your moderator for this briefing. From [inaudible] of JPMorgan, regarding non-interest income, what is driving faster growth in non-interest income, and is this sustainable? Is it volume driven, or did you change your pricing or rates in any of the business lines?
Well, the non-interest income is actually driven by payments information, wealth, and capital markets. Generally, it is a function of the number of clients that we cover. As we expand our branch network, as we expand our coverage on the institutional banking side, it's natural that we will have more clients availing of our services. It is a volume-driven thing, not a pricing thing.
If I may add also, again, aside from a bigger footprint, a bigger branch network, there's also focused cross-selling efforts among our businesses to help each other provide more products to our clients.
For credit costs and provisions, any comment on the asset quality NPL formation outlook and credit costs for the year? Are you comfortable drawing down the NPL cover to have a lower?
I think we've maintained the NPL cover despite the downtrend in our NPL ratio. I think that's something that is representative also of the pace of NPL formation. It's something that we think is manageable. Again, the probability or what we hope to see is that we continue to see an improvement in our NPL ratio with coverage more or less remaining steady. The accompanying credit costs will be, as we guided from last year, would be in the low- 40s to even sub-40s, what we've seen in the first quarter.
Hi, Ika Elanon from Papa Securities. Just two questions on my end. First, where do you plan to put the freed-up reserves? If you can maybe provide estimates or percentages for the allocation. For the second question, when will you release the published balance sheet? I think BSP revised the deadline to 20 working days after reporting period. Thank you.
The 17Q is out already. It's posted at the PSE website already. In terms of the allocation, Coco?
Yeah. The March 28 BSP cut reserves 2%. That is slightly less than PHP 60 billion for us in terms of freed-up balances. What we have done is we have allocated some of it to loans, some of it to paying down expensive time deposits, and some of it to being tactical in terms of our portfolio.
Hi, I just wanted to quickly ask with regard to BDO Network's latest figures, how much of BDO Network's loan book is coming from unsecured lending? What the latest mix is among the different segments of loans here? If available, what the latest NPL cover is for BDO Network Bank?
The entire loan portfolio of Network is unsecured, from salary loans to micro SME lending, effectively. While, let's say the salary loans are unsecured, we have the benefit of the automated payroll deduction system, which to a large extent, reduces the collection risk or asset quality risk for us. Okay?
Okay. Thank you.
That concludes our Q&A portion. For our virtual attendees, thank you for joining us today. For our physical attendees, we have lunch prepared. Thank you.