Good afternoon, everyone. Thank you again for joining us this afternoon. We’d like to share with you our first quarter results. First, we recorded a net income of PHP 18.5 billion, again, driven by growth across all businesses and resulting in a return on equity of 14.3%. We’ve seen an acceleration in loan growth from 9% last year, we are now running at about 13%. We are ahead of the system growth number of about a little above 9% currently. Asset quality continues to remain stable. Our NPL coverage at 188% and our coverage ratio at 181%. It’s been pretty much in that level since last year. Lastly, our capital position remains solid. Our book value is up 12% to almost PHP 100 as of end of March.
In terms of our financial performance, the net income of PHP 18.5 billion is a 12% growth compared to last year. Net interest income, more or less growing with stable margins. We’ve seen net interest income growing at the same pace, more or less, as the balance sheet growth. Loan growth of 13%, NI growth 13% as well. Non-interest income up 11%. The basic changes in terms of insurance premiums, last year, if you recall, insurance premiums were down about 4% year-on-year. This year, we’re showing a growth. The traditional component of our insurance premiums remains strong with mid to high teens growth year-on-year. Our trading and FX up compared to last year. Treasury has been able to take advantage of the volatility in the markets, both in terms of fixed income and foreign exchange side. Operating expenses up 15%.
This compares to almost 20% growth in OpEx last year. It’s still mainly driven by volume related and branch expansion and IT spending. PPOP is up 8% year-on-year. Provisions, we set up about PHP 3.4 billion. This about 5% more than what we did same period last year. Again, PHP 18.5 billion is a 14.3% return on equity. On the balance sheet, our customer loan’s up 13%. This comes off what we saw as good momentum in the fourth quarter. On the investment security side, it’s an 18% growth compared to last year. It’s still a gradual build up in our book. It still accounts for about 21% of our total assets. On the funding side, 13% growth overall. Again, CASA is starting to show some better growth trajectory.
Last year we saw CASA flattish at about just a 1% growth on the full year. Far, we’re now seeing about 4% growth in our CASA. Again, we attribute that to the marketing efforts for different units and the continued expansion in our branches. Shareholders equity up 12%, again, primarily from net profits. The book value per share is up 12%. In terms of system loan growth, we’re growing about 4% faster than the system. The bright spots, food, logistics, infra. Far, these are where we’re seeing a stronger loan demand. Looking at the different segments, consumer more or less continuing around 13.5% growth. Corporate from an 8% growth last year, the year-on-year growth now is doubled, almost 16.5% year-on-year growth. On the funding side, CASA was up 4%.
Our cost of deposits, given the current growth in funding, is up to 1.7% from 1.35% last year. So far this year, we've opened about nine branches, 11 at BDO Network Bank. We've temporarily consolidated two branches at BDO, but we plan to redeploy these licenses during the course of this year. On the non-interest income side, fee-based continues to contribute at close to 60%, followed by insurance premiums. As I mentioned earlier, total premiums are up 3% as against a negative 4% last year with traditional, again, continuing its high teens contribution. The first quarter, traditional premiums contributed over 80% of total compared to 75% last year. For our securities portfolio, more or less same thing, steady state. Our duration is still under five years. It still constitutes 21% of our total balance sheet.
In terms of cost income ratio, we saw a temporary uptick again, given the consolidation of SM Capital, given the business taxes that we saw in the first quarter. Asset quality, again, stable so far, and at the level of provisioning that we did, that's equivalent to about 47 basis points versus the 60 basis points last year. In terms of profitability. PPOP at PHP 27 billion for the first quarter. In terms of capital, our CET1 parent level was at 13.2%. I think this compares to about 13.3% for last year, and it's slightly down because of the acceleration in loan growth that we saw during the quarter. In terms of dividends, we announced last Friday that we are increasing our dividend payout. From PHP 0.75 per quarter, starting the second quarter of this year, we will be increasing that to PHP 1 per quarter.
The total expected cash divs for this year would be PHP 3.75. Related to the SM Capital transaction also, we have also announced that after the merger becomes effective, we plan to distribute the resulting treasury shares from that as property dividends to all existing shareholders. Now for the macro outlook, can I ask Dante to give us a short update?
Our macro view for 2024 is actually largely unchanged compared to the last time we all met. In terms of economic activity, we believe private consumption will remain healthy, and this is because the drivers of consumption spending are all largely intact. In terms of our base case GDP forecast for 2024, again, we're still looking at a figure slightly below 6%, and the reason for that is that the government is focused on fiscal consolidation without new taxes. That would mean that the growth in government spending would be at a lower trajectory than historical trend, and that would be a drag on GDP.
The last bullet under economic activity, we do have a bull case scenario for the economy wherein we are looking at above 6% GDP growth, the scenario for that is we see a possible CapEx recovery, a strong CapEx recovery, assuming you have a stable interest rate and inflation environment. With regard to inflation rates, we continue to expect full year average inflation to come in within the BSP's 2%-4% target range. Core inflation continues to decelerate, that means there's no broadening of inflation pressures despite all the commodity price volatility we are seeing. It seems that the BSP's dovish pivot keeps getting pushed back further and further.
We think the BSP's correct to be worried about commodity price trends. Just one last point with regards to inflation. The two commodities we look closely or we monitor closely are oil and rice. We do think at this point that if inflation breaches the 2%-4% target range, the BSP on the high end, it's because oil prices come in much higher than expected. Rice prices so far this year are actually trending well within our inflation parameters.
In terms of our business outlook, we think that loan growth can be sustained given the mix of the business that we're seeing today. There's more investment type loans starting to come through. We hope that encourages more companies to start their expansion plans. Even if rates continue to stay high today, even if the rate cuts get pushed back, at least the expectation is that it'll not go up from where it is today. Again, the inflation indicators continue to point to a deceleration in core inflation going forward. We hope that that will in turn encourage more CapEx loans in the coming months. Secondly, because of the interest rate environment, we expect NIMS to remain stable.
We hope that with faster growth in our consumer loans and with better growth in our CASA deposits, that will in turn create a better prospect for our margins going forward. On the fee income side, it's been steady as she goes, we believe that the strategic initiatives that we are continuously implementing will provide positive momentum going forward. Lastly, on the asset quality, again, I think no major threats that we see in the meantime. In summary, our performance again, is reflective of the continuing strength of the franchise and the effectiveness of our strategy. The multiple drivers are in place for sustained profitability and return on equity. The investments in technology, processes, and business enablers will continue, and we expect those to contribute to our profitability going forward. At this point, we can take questions.
Hello. This is Richard Tan. I'll be moderating the Q&A. For the Q&A panel, may request our President and CEO, Nestor Tan, to go in front, as well as Dante, Director of Research.
Good afternoon. Yes. Thanks for the opportunity. I guess my question is regarding loan growth. It's good to see the momentum in acceleration, right, since the fourth quarter. Surprised to see the 16% growth in corporate loan growth. I guess my question is, given the rise in bond yields, are you getting any sense from your corporate customers that that's starting to affect appetite maybe for the balance of the year, or the momentum is still there? I guess that's my question.
What we found out is that the bigger driver of demand for loans is actually the volatility. If it's stable or it's stable and getting better, people tend to invest. If it's volatile and they're not sure, that's when they hold back. It's different on the consumer side, particularly in mortgages. That one is interest rate sensitive. On large CapEx, the more important thing for them is predictability so that they're able to price their goods properly. I think what we've seen here is a reaction to a more stable interest rate environment, and in addition to that, improving.
Question from AllianceBernstein, Trevor Kwong. Could you talk a little bit about mortgage demand trends?
Mortgage demand trends. I think it's steady, but slightly slowing down, I think, because people are waiting for interest rates to soften a bit. That's the segment of the market that's interest rate sensitive. At the moment, it's still steady. We see a slight dip, but I think it's just more of a statistical aberration rather than a trend.
There's a question now from Shane Mathews of White Oak Capital. Fee income was down quarter and quarter. Is 1Q a seasonally weaker quarter? Do you expect fee income growth to improve in the coming quarters? If so, what are the key drivers?
Yes, it's slower, generally first quarter is a slow quarter for us.
Compared to the fourth.
Yeah, especially compared. We have a very strong fourth quarter last year.
There's a certain seasonality to the fee income. Typically, the fourth quarter is when we see strong fees, especially coming from consumption-led spending. Okay. The first quarter is typically a slow period. Again, we think that with the things that we're doing in terms of improving market coverage, we think that we will be able to see better numbers going forward in terms of growth.
Okay, thank you. From HSBC, Yash Taparia. Can you share more color on cost of deposits? Where do you see it going in the next few quarters?
The cost of deposits really driven more by our funding needs. One positive development that we highlighted earlier was that we're seeing better CASA growth numbers today compared to last year. We hope that that is something that will continue, especially with more activity.
Okay.