Good afternoon, ladies and gentlemen. Welcome to our earnings call to discuss BPI's results for the fourth quarter and the full year 2024. I am Chinky Lukban, your moderator for this session. We are conducting this briefing in a hybrid manner with our BPI speakers and panelists here in our headquarters at Ayala Triangle Gardens, Tower Two here in Makati City. While the rest of our participants are dialing in remotely. To enhance your viewing experience, please adjust your view settings to side-by-side speaker. I am pleased to introduce you to our speakers and panelists this afternoon. First, TG Limcaoco, President and CEO. Eric Luchangco, our CFO and Chief Sustainability Officer. They will be joined in the panel for the Q&A by Ginbee Go , our Head of Consumer Banking. Tere Marcial, Head of our Private Wealth Business. Jenny Lacerna, Head of Mass Retail Products.
John-C Syquia , Head of Institutional Banking, and Boyie Sarte, Head of our Payments Council. We are also joined by the rest of the BPI leadership team in this call. This afternoon's agenda will begin with opening remarks from our president, TG Limcaoco, followed by our CFO, Eric Luchangco, who will walk you through the fourth quarter and full- year 2024 performance highlights, digital and sustainability updates. The floor will be open to your questions from the audience. This call is being recorded and legal disclaimers apply. Now let me turn you over to TG for his opening remarks.
Thank you very much, Chinky. A warm welcome to everyone joining the call today and with us present today. Today's briefing will cover our fourth quarter results as well as the full year results for 2024. I'm sure many of you have already seen the press briefing. We're very encouraged by the strong growth in earnings, underpinned by the very strong growth in revenues and by the lesser than percentage growth in operating expenses, giving us continued growth in our bottom line. I think our CFO, Eric, will continue to give more detail on that. As we have agreed internally, we continue to provide our investors with more and more details about our business, breaking down our segments into their characteristics so you better understand what we are trying to do from a strategic point of view.
As we try to pivot the bank towards a greater share of our loan book towards the consumer or the non-institutional segment. Our revenues, our non-interest income continues to grow strongly. I think they grew in excess of 25% in 2024. As well as our NPLs continue to moderate down in the fourth quarter versus the third quarter. Likewise, our NIMs continue to expand in the fourth quarter versus the third quarter.
Finally, Eric will also give us an update on many of the things that we have been doing in the last three years and how we see them continuing in the next three to five years, and what they mean towards our overall strategy of building this bank to a very different bank in the next three to five years. Without further ado, I'll just turn it over to Eric. Then we'll be happy to take questions after this. Eric?
Thank you, TG. Welcome to everybody joining us here today. We'll start off with our fourth quarter and full- year 2024 earnings results. We're pleased to report that the bank delivered another year of strong results, leading to another year of record income. The highlights of which are as follows. On profitability, the bank delivered a record net income of PHP 62.05 billion, up 20% from the prior year, primarily driven by revenue growth and improved efficiency while continuing investments in people, product, and technology. For the fourth quarter of last year, the bank delivered a net income of PHP 14.06 billion, down 19.3% on the sequential quarter, largely from higher expenses and reduced trading income, which sustained strong profitability with a full year return on equity of 15.07% and ROA of 2.0%.
The balance sheet continued to expand with loans up at 18.2% year-on-year and 7.2% quarter-on-quarter. While deposits were up 13.9% year-on-year and 5.2% quarter-on-quarter. Our balance sheet remains strong with indicative LCR at 162% and NSFR at 143%. Indicative CET1 ratio at 13.8%, while CAR was at 14.5%. Asset quality remains solid. NPL ratio improved on the sequential quarter by 17 basis points to 2.13%. Year-on-year, however, the NPL ratio is up by 29 basis points. This is consistent with our accelerated growth in consumer and MSME lending. The NPL cover stood at 106%, which is in line with our expectations. In 2024, we further strengthened our customer franchise, while welcoming five million new clients and attained the highest Net Promoter Score among local banks and financial institutions.
We saw record volumes and gained market share in several of our businesses. Finally, we further strengthened leadership in digitalization and sustainability. Our performance in the fourth quarter, we delivered a quarterly net income of PHP 14.06 billion, down 19.3% on the sequential quarter. This is primarily due to the usual spike in operating expenses, which were up 15.9%. Revenues were moderately lower following the record fee income and strong trading gains in the third quarter, but were mostly compensated for by gains in net interest income and Forex sales.
Compared to the fourth quarter of the previous year, net income was up 7.6%, driven by revenue growth, which was up 18.5%, partially offset by operating expenses, which were up 19.3%, and provisions by 80%. We delivered three consecutive years of strong income growth driven by revenues. In 2022, we delivered a 65.9% increase in income to reach PHP 39.6 billion.
The following year, in 2023, we reported a further 30.5% increase in income to PHP 51.69 billion. In 2024, we built on that success and delivered another record net income of PHP 62.05 billion, which is up PHP 10.36 billion, or 20% from last year. This was largely driven by record revenues, which more than offset the increase in operating expenses and provisions. These results include revenue of PHP 170.1 billion, up 23%, driven by record net interest income up 22.3%, attributed to strong loans growth and higher NIMs. Strong trading income, which was up 71.8% as we took profits when interest rates declined in the third quarter. Record fee income up 24.1% on sustained volume growth in several of our businesses. Operating expenses were up 21.3% from continued investment in people, product, and technology. Pre-provision income at PHP 86.34 billion was up PHP 17.13 billion or 24.8%.
Finally, provisions up PHP 2.6 billion or 65% higher. Moving on to our shareholder returns. You will note that the earnings per share calculation from 2019- 2024 removes the impact of the property dividends of 406 million common shares, which were issued from treasury shares. Since these were issued to all existing shareholders, does not affect the economics of each of the shareholders. Looking at that, earnings per share has increased for four consecutive years, with 2024 delivering an EPS of PHP 11.78 per share, which is up 12.3% from the previous year, following increases of 65.8% and 30.3%. In terms of capital efficiency, the higher earnings sustained strong profitability ratios with ROE at 15.07% and ROA at 2%. Total resources for the bank stood at PHP 3.32 trillion, up 4.5% quarter-on-quarter and 14.9% year-on-year.
Gross loans stood at PHP 2.29 trillion, while deposits were at PHP 2.61 trillion, up 18.2% and 13.9% year-on-year respectively. Excluding the amount of loans and deposits added to the book on day one of the Robinsons Bank merger, loan growth was at 13.0% and deposit growth at 7.6%, higher than recent industry trends and reflecting sustained organic growth. Our deposit base remains stable, with retail and business bank clients contributing 69% of total deposits and 74% of CASA. As shared in our previous meetings, we continue to manage deposit growth, not to chase volume with rates. As a result, our loan to deposit ratio continued to improve, up 161 basis points quarter-on-quarter and 313 basis points year-on-year to reach 87.5%.
We continue to strengthen our deposit franchise with our mass market customer segment showing consistently strong deposit growth in the past 12 months and the highest CASA ratio among our market segments. Deposits from our mass market are up 166% from last year and 24% on the sequential quarter. Continuing with the growth trend of the previous quarters, all loan segments posted solid year-on-year growth led by business bank, which is our SME portfolio, which was up 126%. Personal loans up 92%, microfinance up 62%. These were followed by auto loans up 38.5%, mortgage at 37.6%, and credit cards up 31%. Institutional segment grew 11.1%. This same positive trend applied to sequential quarter growth, with institutional up 6.7%, business bank up 22%, personal loans up 8.6%, credit cards same 8.6%, auto loans 8%, microfinance up 7%, and mortgage up 6.8%.
Collectively, the non-institutional segment grew 41.7% year-on-year, outpacing the growth in the institutional loan book and further shifting the mix in favor of non-institutional loans, which now account for 27.7% of the total loan book, which is up 460 basis points from last year. Full-year NIM at 4.31% is up 22 basis points from last year. Quarterly NIM increased in the sequential quarter by two basis points to reach 4.37%, and by 22 basis points from last year. Our various thrusts to support NIM expansion are paying off, with sustained loan mix shift towards non-institutional segments, managed time deposit growth, and a shift to borrowings from time deposits, albeit moderately. Finally, a consistent improvement in the loan-to-deposit ratio, and loans to total funding ratio. The triple R reduction in October was also supportive of the NIM expansion.
We slightly pivoted from time deposits to bond issuance, the bond issuances as a more efficient source of funding, leveraging on the strength of BPI's credit rating and on incentives provided for banks for loans to green and sustainable projects under BSP Circular No. 1185. As of December, the bank's outstanding borrowings and bilateral loans stood at PHP 131 billion, unchanged from the previous year compared to 2022. Total borrowings and bilateral loans are up 69%. The bulk of these are in pesos, pay a fixed interest rate, and generally have relatively short tenors at less than two years. This allows us to maintain flexibility for refinancing in line with our expectations that rates will trend downwards in the near term. The second chart shows that total funding increased by 14.2% year-on-year. Deposits remain to be our core source of funding, other borrowed funds grew faster than deposits at 19%.
As of December, nearly 5% of total funding is from bonds and bilateral loans, this may potentially increase with the refinancing of the upcoming PHP 36.6 billion bond maturity in May of this year, which we expect to be able to refinance at lower rates, and lower regulatory reserve requirements under BSP Circular No. 1185, which again, will be supportive of our NIM. Looking at the fee income. We sustained our growth in fee income led by our biggest fee businesses, cards, wealth management, and insurance, which collectively contribute 58% to total fees. Card fees were a major driver of the fee income growth, up 24%, driven by a 14.7% increase in the card base, 24.6% increase in transaction count, and 23.4% increase in billings from retail, cash advances, and installment loans. We gained market share in card billings, which grew 35 basis points to 19.6% as of December 2024.
Wealth management fees increased 19.5% on higher AUM, an increase in fees for select investment funds beginning February last year. AUM soared 25% to a record PHP 1.53 trillion, led by a 64.8% increase in private wealth, 34.2% increase in personal wealth, and 6.7% increase in institutional business. Wealth's client base reached 1.13 million, up 69%, primarily driven by third-party wholesale business and defined contribution clients. Year-to-date September, our market share in the trust industry rose 64 basis points to 20.3%, and we hold a commanding market share in investment funds at 33.9% and a 29.4% market share in employee benefits. Income from insurance, up 55.1%, is comprised of equity income from joint ventures, royalty fees, and branch commissions. For 2024, equity income was up 84% and branch commissions also up 28% on new products launched in 2023 and 2024.
Other sources of fee income included service charges up 25.8%, ATM and digital channels up 26.1%, transaction banking up 21.9%, remittance up 16.8%, corp clients and business banking up 24.5%. These increases were partly offset by the decline in securities brokerage and investment banking, primarily due to two large project finance deals that were closed last year. In 2024, investment banking actually closed 29 deals versus the 23 deals in the prior year. Asset sales were down due to the absence of FIST sales compared to the prior year. All told, we saw solid growth in fee income, and we are looking to carry this momentum forward in 2025. Moving on to asset quality. Asset quality improved in the sequential quarter. The NPL ratio declined 17 basis points to 2.13% on the sequential quarter, driven primarily by paydowns and CDS loans that turned current.
Year-on-year, the NPL ratio increased 29 basis points, though from a low level, driven by the continued shift of the loan mix to the non-institutional segments. Our Stage 2 loans declined 20% compared to the start of the year due to pay-downs and upgrades to Stage 1. Credit cost at 32 basis points has remained below normalized levels for the last two years. We have continued through 2024 to draw from provisions that were accumulated during the pandemic as the economic conditions have improved dramatically. The NPL cover remains sufficient at 106%, in line with what we believe is a more appropriate level. Looking at the NPL ratio and NPL cover per segment, NPL ratios declined on the sequential quarter in all segments except microfinance, where NPL ratio was up 2 basis points, which is effectively flat.
NPL ratios of mortgage, auto, business banking, and microfinance were at their lowest levels in three years, notwithstanding the 50%-250% volume growth over the same period. For credit card and personal loans, where we saw an uptick in NPL ratios year-on-year, this is aligned with our strategy of targeting a broader market. We note that the net yield after credit cost and the risk-adjusted margins make a compelling case for continued risk-taking in this space, and that we continue to monitor delinquency performance on a per initiative basis to ensure performance within expectations. Also, potential losses are adequately covered by NPL cover for credit cards at 152% and for personal loans at 104%. NPL cover for mortgage and auto are understandably lower as these are backed by collateral.
We share here what we are seeing in terms of risk-adjusted margins, which measures the profitability of the loan segment versus the cost of risk. The RAM for loans has a wide range from 1.3% of institutional loans to 41.2% of microfinance loans. In changing the mix of our loan book, we are not just chasing the high yields of the non-institutional segments, but continue to measure and monitor the risk being taken to achieve those yields in order to improve the overall performance of the loan book. Moving on to operating expenses. Operating expenses increased 21.3%, led by manpower, technology, and marketing expenses. Manpower cost was up 24.6% due to structural salary adjustments, including the CBA negotiations this year and the higher headcount resulting from the merger. This also includes expenses on HR initiatives that resulted in lower attrition, enhanced training and development, and better employee engagement.
Premises cost up 14.8%, primarily due to additional branches from the Robinsons Bank merger. We expect to consolidate or co-locate about half of the 158 RBC branches starting this year, with annualized cost savings estimated at PHP 667 million per year. Technology expense was up 13.9% on continued investments in digitalization as well as from volume-related expenses. This growth rate is well below the growth rate of earnings and is moderated versus the tech expense growth over the last couple of years. Other expenses include marketing expenses attributable to campaigns, particularly on the consumer side, and rewards expense, which was expanded beyond credit card usage to loans, deposits, investments, and payments, which was up 24.5% year-on-year. These costs brought significant value to the bank. We added five million new customers and maintained the number one position in NPS among banks for the second consecutive year.
We saw good growth in volume across the bank and gains in market share. We achieved operational efficiencies with revenue growth outpacing manpower expense growth, deposits growing above industry trends without adding branches except for the merger, and an expanded client base, with many added digitally at a lower acquisition cost. The cost-to-income ratio has been on a steady decline since 2021, adjusting for the one-off gain in 2022. CET1 capital stood at PHP 368 billion, up PHP 44 billion from last year on net income accretion and additional shares issued through the merger. The CET1 ratio declined 150 basis points year-on-year and 96 basis points quarter-on-quarter on faster risk-weighted asset growth compared to CET1 capital. Details of which we will discuss in the succeeding slide. Nonetheless, capital ratios remained well above regulatory and internal thresholds and sufficient to support continued loan expansion.
Showing here the CET1 ratio, which declined 150 basis points to 13.79%. The impact of income accretion and additional paid-in capital net of regulatory adjustments were more than offset by the negative impact of credit-risk-weighted assets, dividend distribution, and decline in OCI. The increase in risk-weighted assets is attributed to higher loan volume, accounting for 79%, as well as the shift in loan mix, which accounts for 21% of the increase. The CET1 ratio declined 96 basis points in the fourth quarter, attributed to loans growth, dividends payout, and decline in OCI, which was partially offset by income accretion. Capital ratios remained well above regulatory and internal thresholds, and sufficient to support continued loan expansion. Strong earnings have supported a sharp increase in capital distribution with the implementation of the variable dividend payout in 2022.
In 2024, the bank declared a total cash dividend of PHP 3.96 per share, up 17.9% from 2023, and 120% from the fixed dividend amount paid in 2021. At this point, please allow us to provide you with an update on what we have accomplished three and a half years since our second quarter earnings call in 2021, when we shared with you our key initiatives, which include increasing the share of customer loans and SME for the non-institutional segment in our loan book. Establishing ourselves as the undisputed leader in digital banking, using branches as sales stores more than service points, closing the gap in funding leadership, and promoting sustainable banking. All of these are underpinned by our passion for the customer. We continue to see positive trends on the loan book, which stood at PHP 2.29 trillion, up 18.2% year-on-year and 14.4% for a three-year CAGR.
The strong performance of the loan portfolio is broken down in the table on top. Institutional loans posted a three-year CAGR of 11%, while non-institutional loans posted a 25.2% CAGR with consistently strong growth across all segments. The table below shows the steady shift of the loan mix to non-institutional segments, which collectively account for 27.7% of the loan mix, from 21.1% in 2021. As expected, the shift to non-institutional loans resulted in higher NPL volume, although the NPL ratio actually declined from 2021- 2024 due to an improved backdrop and strong loan growth. Finally, we gained significant market share in total loans, credit card, auto, and mortgage loans since 2021. Turning to Teachers' Loans offered through Legazpi Savings Bank or LSB, which is a subsidiary we acquired through the merger with RCBC.
Leveraging on the combined branches of BPI and BanKo, the Teachers' Loan portfolio grew 46% to PHP 88.72 billion, while loan releases reached PHP 7.63 billion, up 41% versus releases in 2023, which grew 38%. We believe growth in 2025 will accelerate further as approval to sell Teachers' Loans through BPI and BanKo branches was only granted in July, and therefore, we have not yet been able to really maximize our branch network. Motorcycle loans, another product acquired through the merger reached PHP 4.5 billion, up 19% year-on-year, reversing a portfolio decline seen in 2023. The growth in 2024 added 31,500 new customers over a 12-month period ending October 2024. We are excited about the contribution of Teachers' Loans and motorcycle loans to our portfolio, and 2024's performance is an early sign of the value that BPI can add to the products using its scale.
Today, we only have a 2% market share in total Teachers' Loans volume, 5% market share in teacher penetration, and 12.5% market share in motorcycle loans. We are confident we can become one of the dominant players in these segments, supported by our digital onboarding platform and BPI's large branch network and simplified process. On establishing ourselves as a leader in digital banking, allow me to provide a brief update on our client engagement platforms, of which we have seven digital platforms. Starting from the left, VYBE by BPI, our e-wallet also carries our rewards program. It currently has 1.7 million sign-ups, with 74% being VYBE Pro users, allowing them higher usage limits. We increased the functionality by adding new features to the app as well. BPI Mobile, our main operating app for retail clients. The first banking app in the country to feature AI-powered tracking and insights.
For 2024, we introduced new features like mobile check deposit, cardless withdrawal, and currency conversion using your mobile phone in the BPI Mobile app. Next is the BPI Trade app for clients who invest in equities and currently has close to 90,000 enrolled accounts and has seen volumes grow 20% through 2024. The BPI BanKo App for microfinance clients. Last year, we launched a short-term credit line within the BanKo App. The BPI BizKo App for SMEs, although currently with just 25,600 users, we have revisited the functionality of the app and will be adding new functionality this year that we believe will significantly improve its customer value proposition.
The BPI BizLink App is for corporate clients. We are transitioning to the newer version of this app that will improve the user experience and ease the addition of new functionalities, making it easier to improve the app to customer needs, which we believe will allow us to increase our customer penetration rate from the current 45%. Finally, we have the BPI Wealth online for high net worth individuals, which has over 15,000 enrolled users, which is 15% up from last year. We continue to grow existing functions, increase capabilities in open banking, and a particular focus for this year to improve the UI/UX experience for our customers. We now have 117 API partners, up from 74 in 2019, and offer more than 17,000 services from only 749 in 2019. Moving on to the use of data, which is an integral part of our digitalization initiative.
Data has become an important asset for the bank, transforming how we operate and serve our customers. We have brought down data from several sources and broken silos to have a single source of truth to be used by the entire bank. We use data to grow the business through customer acquisition and growth in customer share of wallet programs, which have contributed significantly to card acquisition, with 73,700 new cards over a one-year period, upgraded at least 50,000 customers, bringing in at least PHP 50 billion of growth in deposits and funds, and booked over 1,300 new loan accounts with over PHP 1.8 billion in volume for our SME businesses. We also use data to grow our business through hyper-personalization with customized product recommendations. Finally, with geoanalytics, we make informed decisions in choosing areas for client acquisition and physical expansion programs of our businesses.
In building a strong data culture and making BPI Digital to the core, we have several programs, including Flags, a data literacy program for all UniBankers now in its third year. Hackathons and data summits, now in its second year, aimed at fostering interest in data and AI-driven innovations in banking and finance, and several training programs for analytics officers in partnership with Eskwelabs, and workshops on data awareness and appreciation. Lastly, the migration of data and analytic models to cloud has resulted to significant man-hour savings and productivity gains across the different data teams, allowing us to scale up models, expand service reach to different business units. Despite our strong orientation towards digitalization initiatives, we continue to believe in the value of physical branches. We continue to open branches in areas where we don't have branch presence, even while consolidating and co-locating existing branches in oversaturated areas.
BanKo, our microfinance arm, continues to add branches, bringing the count to 395, supplemented by 17 kiosks and 10 BanKo on-the-go roving vehicles, which bring banking services closer to communities with limited access to easy and affordable banking. We will continue to rationalize our branch footprint. For the branches that remain, we will leverage on the strength of our physical stores and digital capabilities in delivering differentiated customer experience at the branch. We will transform these branches into phygital, prime phygital, and flagship branch formats, depending on the target customer experience, and location. We have already transformed 63 branches with a concierge and quick transact area or UniPro area, meeting pods and meeting rooms equipped with virtual conferencing capabilities to be able to access product specialists and provide expert advice.
We show here the facade of our newly renovated phygital branch in Lanang, Davao, with the typical interior of a phygital branch. This year, we are targeting to renovate many other new branches. Our branch growth and our digitalization focus come together in our omni-channel approach, which adds value to our customers. We show here the growth in business volumes after our branch's transformation into a phygital format. 130% higher on average monthly net acquisition, 34% higher on monthly gross acquisition, 1.2% higher on increase in digital customers, 10.3% increase in deposit ADB, and an improvement in NPS for the branch stores by 4.81 points. Beyond our own branches, we introduced agency banking in 2022, which creates partnerships with retail outlets like convenience and department stores, supermarkets, gas stations, and pharmacies to make our products available to Filipinos where there is limited banking presence.
Last year, agency banking expanded the BPI physical network with 6,400 partner stores, adding to over 850 BPI branches, bringing the total to over 7,000 customer touchpoints. More Filipinos can now apply for BPI products like deposits, credit cards, personal, auto, and housing loans, and insurance via QR, and perform essential banking transactions such as deposits and withdrawal through our partner portals. With these agency banking retail partner stores, we welcomed 679,000 new-to-bank customers and sold 747,000 products. In 2021, we look to further increase the partner doors to 8,100 and expand the product offerings to include investments, insurance, motorcycle loans, and small business loans, as well as enable most of these partner doors to allow BPI customers to deposit and withdraw from their BPI account for free.
On QR payments, agency banking has signed up 1,300 partner merchants to reach 16,000 stores now accepting QRPH payments via our BPI OneQR payment solution. This has allowed more funds to come in with 90% of over PHP 8 billion in payments coming from other financial institutions. Add to this, BPI pioneered in the Philippines payment via voice confirmation through Soundbox. Through agency banking, BPI Salary On-Demand was offered to corporations and businesses, allowing employees to instantly access their earned salary ahead of their payday, anytime, anywhere, with just a few taps via the PayWage app. As of December, we have 95 companies with more than 20,000 employees enrolled in Salary On-Demand. While we work with employers on Salary On-Demand, we also went directly to employees whose payroll account is with BPI.
These employees were pre-qualified based on set parameters like payroll credits and regularity of payroll credits. We pre-qualified 276,000 employees, of which 19,000 have registered with 35,000 availments last year. On funding leadership, as of December 2024, the total deposits at PHP 22.6 trillion, up 33.7% from 2021. Growth has been predominantly from time deposits, which is up 114% as clients shift to higher yielding deposits due to significant interest rate differential. Over the same period, we grew market share in total deposits, though we did suffer an erosion in our CASA market share. Although we have not achieved the same degree of success in this aspect as we have in some other areas of our business, there have been some gains in 2024 focusing on key initiatives like becoming the main operating bank for corporate clients by elevating their transaction banking services over our platforms.
Two, payroll CASA, where we closed around 1,600 new payroll contracts, bringing in 523,000 individual payroll accounts opened with the bank. Three, supply chain financing, where we recently launched our supply chain finance program with 15 anchor clients and 362 suppliers participating. We will scale this up in 2025 in addition to our renewed focus on high-net-worth CASA and OFW CASA. Our client base now stands at 16 million, with a record 5 million new clients onboarded in 2024, 52% of which were through digital channels. On the bank sustainability initiative achievements, we focused on two pillars. Responsible banking. BPI's loan portfolio in support of UN SDGs reached PHP 958 billion, representing 55% of the total portfolio, which is just shy of our end of 2026 target of PHP 1 trillion.
BPI is on track to meet its target to zero out its coal generation portfolio by 2032, with BPI's coal exposure dropping to 24% of the bank's energy portfolio as of the end of 2024, which is less than half of the 62% share of coal in the Philippine energy mix. BPI, BanKo, and Robinsons Bank served a total of 880,000 underbanked Filipinos and MSMEs versus our target of 5 million by 2030. Still a lot of work to do there. BPI launched five new sustainability-related products and services, BPI Green Solutions, BPI Salary On-Demand, AgriNegosyo, Teachers' Loan, and LAV Loans. BPI also added two new product categories under SDF, sustainable water systems and pollution control, while BPI Capital also managed several ESG-themed deals this year worth PHP 39 billion, including for ALI, Maynilad, EDC, and Alternergy. The second is responsible operations in 2024.
The bank added another 11 IFC EDGE- certified branches for a total of 22, all achieving at least 20% savings in electricity, water, and embodied energy and materials. BPI is the first Philippine bank to shift to sustainable aviation fuel under DHL's GoGreen Plus program, which reduces CO2 emissions from shipping parcels and documents. Our cards team converted six out of 11 card variants to rPVC, made from 85% to 100% recycled plastic sourced from industrial waste. BPI saved seven tons of carbon and three tons of plastic with every one million cards issued. Finally, before we wrap up, I want to add some notes on areas of growth we've been seeing from RBC as its operations transition into BPI. We showed earlier the 46% growth in Teachers' Loan and 19% growth in motorcycle loans in just year one of the merger.
On this slide, we show payroll CASA, which has delivered 4%-5% growth sales volume and transaction count from merchant acquiring business of about PHP 15 billion- PHP 16 billion each quarter and growing. On the right side, we show referrals of BPI products from RBC branches, both in terms of transaction count at the top and value at the bottom. From the first quarter to the fourth quarter, we're seeing growth of 3.2 times in count and 7.3 times in value. We expect to build on this growth in 2025. Finally, on the next couple of slides, we show awards and recognitions garnered by BPI from reputable foreign and local award-giving bodies. We'll provide copies of these, I won't run through each one of them individually.
Finally, BPI garnered year to date a total of 18 ESG-focused awards from various prestigious institutions such as FinanceAsia, Global Finance, and IFC, surpassing our own record and industry high of 14 ESG-focused awards received in 2023. In summary, on profitability, we saw continued improvement in profitability with another record income year led by revenue growth.
On the balance sheet, strong loan growth across all segments led by non-institutional segments, while the Bank's liquidity and capital positions remain above regulatory thresholds. On asset quality, strong asset quality was maintained with sufficient cover. Lastly, we are on track to deliver improved dividends next year. We are pleased with another year of strong operating results. We are optimistic about the Bank's ability to sustain its performance in light of normalization of interest rates and an improving macro outlook. We will continue to execute our strategic initiatives with discipline. We now open the floor to questions.
Thank you, Eric. Before we open the floor to your questions, may I request our senior leaders to join TG and Eric in front? Please allow us a minute or two to set up in the venue. Joining TG and Eric are Ginbee Go , Head of Consumer Banking, our Head of the Private Wealth business, Tere Marcial, is online. Jenny Lacerna is Head of our Mass Retail Products, John-C Syquia Head of our Institutional Banking, and Boyie S arte, the Head of our Payments Council. If you're joining us via Zoom, there are two functions at the bottom of the Zoom webinar screen you may use to queue. One is the raise hand function. I will prompt you and unmute your line for you to speak. Alternatively, you may type your questions in the Q&A box, we will read out your question on your behalf.
For those on-site, you may use any of the microphones available at the floor or you may raise your hand, we will have someone bring the mic over to you. Please identify yourself by your name and company so we can address you accordingly. Our first question comes from the Q&A chat box, from Yvonne To of Morgan Stanley. She has two questions. Why do you choose to have so many apps versus having one app? Are there a lot of data reconciliation required across all the apps?
Let me get that, Chinky. Yvonne, the reason we have so many apps or seven apps, I wouldn't say so many, is the fact that, one, you need to build an app that is specifically tailored to the use. For example, we have an app for our retail banking client. We have an app for our corporate clients. You obviously cannot have the same app for both. We have an app for a wallet. The other reason you have several apps is the reality that in the Philippines, not everybody has an iPhone or a high-end phone that has a lot of capacity. For example, when you take a look at our apps, the size of our apps is half the size of the leading financial app in the Philippines, and that allows our app to perform faster and be more accessible to more users.
Secondly, when you put a lot of functionality into an app, every upgrade takes a lot longer. The reality is most users will only use 20% of your app. Therefore, if you build 1,000 capabilities to an app, every time you change one or make an improvement to the app, you have to test all those 1,000 capabilities. What you want to do is make sure that you just have the capabilities that are most used by your users into the app. Your question on the data recon, the answer there is quite easy. No, we don't have a lot of data recon because all these apps really just touch the same data source through the core. We have all the apps with APIs touching the core, and they're all accessing the same data.
Thank you, TG. Our next question comes from Aakash Rawat of UBS. Aakash, you can unmute your line and ask your question.
Okay. Thank you. Thanks for the presentation. I have two questions. The first one is, mainly on credit costs. I think given your strategy to shift towards non-institutional loans, throughout 2024
It's obvious that it will result in higher NPL formation as well. The question is, I think in 2024, if you look at the numbers, this gross NPL formation was around 80 basis points. If this continues in 2025, then I think that should result in a credit cost of around 80-85, because your provision coverage is pretty low now. Not low in the sense that it's closer to 100%, so it cannot go down a lot more from here. I'm just wondering, if this is the case, then wouldn't there be any risk to the credit cost guidance of 40-45 basis points that we have at the moment for 2025? How should we think about it?
Sorry. What you're saying is that I didn't capture all of that, what you're saying is that as our shift towards non-institutional loans has gone up, our NPLs has gone up, as we continue to do that, we'll expect to see further escalation in the average NPL ratio, right? Because of that, we'll be having higher credit costs, which is in line with the guidance that we've been given.
Eric, the guidance that has been given is to go from 30-ish levels to 40-45. I'm saying that the gross NPL formation is around 80 basis points. If you look at the numbers for 2024, that's what it was, right? It was around 80 basis points gross NPL formation. We'll have to provide 80 basis points for that, in 2025. Unless half of that is taken care of by recoveries. Again, these are the numbers we don't really get from financials, that's why I'm asking you directly. Is that fair to assume that in 2025, if you have 80 basis points of gross NPL formation, 40 basis points of that will be offset by recoveries, which is why your credit cost guidance of 40 basis points, will stand?
Yeah. Sorry. You're right. Okay. Yes, we expect our recoveries to be the balance. Just for guidance purposes, I think 40-45 basis points was maybe a little earlier in terms of our guidance levels and we've since revised to more like 45-50 basis points in terms of the guidance levels, the recoveries will be the balance.
Okay. You have that sort of visibility on recoveries, because again, we don't get to see that data on a quarterly basis. If you look at the last one year or so, it's fair to assume that 35, 40 basis points recoveries happens every quarter, yeah?
Yeah. Again, it depends on the nature of the NPLs that we're having. I think one of the things that I talked about previously was, in the third quarter, we saw a significant pickup in the NPL levels because of a couple of items, one of which was on the mortgage book where we were seeing delayed payments on CTS loans. There was a strong understanding on our part that we would see recoveries on those, and we have started to see recoveries on those as the delivery of the product to the buyers started happening.
Okay. That was a one-off aspect of it.
That's not fully done yet. That's one of the areas where we expect to see further recoveries. I think even, like you said, even throughout our book, we look at it and we are seeing some situations with some of our corporate customers as well, where we believe we can see some recoveries.
Okay, understood. Thank you. The second question I have is, just on the capital decline that you were explaining earlier. Could you please go through that again? If some part of it was because of higher RWA growth because of the mix shift in strategy. I'm just wondering why did that decline only appear in Q4, when the strategy has been actually ongoing for a few quarters now? Your loan growth has also been pretty fast over the last few quarters.
Part of that is to do with regulatory adjustments. The effect of the merger, from a regulatory adjustment standpoint, hit the books in the fourth quarter because that's when certain items like goodwill and intangible assets were decided upon, right? Through the course of the year, there was a lot of work with the auditors and with an external valuation party, to basically determine the magnitude of some of these items. It was in the fourth quarter where we saw some of those items actually come onto the books.
Does this mean that this was more because of the merger as opposed to the rapid growth in consumer loans that you've seen this year?
Through the course of the year, we were seeing adjustments related to the shift in the loan mix. In the fourth quarter, there was the addition of regulatory adjustments as a result of the merger.
I think how much of this would be a recurring thing?
From the merger perspective, none, but from the perspective of the loan book, the change in the loan mix, that one will be Obviously we continue to head down that road.
Right. Okay. Understood. Great. That's all of my questions. Thank you.
Thank you.
Thank you, Aakash. Thank you, Eric. We have a question from the Q&A chat from Emuel Olimpo. I think this is for John-C. Could you describe institutional clients leaning to engage in intermediation this year? Any idea on expansion-related spending?
Thank you for that question. Yeah. It's very relevant, I guess, dynamic situation in that front. Over the last two years, we've been consistent in telling you that we see our client base still focused on capacity building, especially in the infrastructure side. If you're asking about industries, we'll continue to see build in logistics power, maybe some more in telco and not the traditional telco sense, but in being able to handle data traffic. That's continuing. I think maybe to continue on the growth areas, there will still be construction. We believe that it's a good area for our clients to continue to invest in, but this will be on certain areas. For instance, where we have underspend is in the area of tourism. These are tourism and tourism direct and indirect areas.
The support to move volume, to move people, but at the same time capacity in actual hotel space and entertainment for them and the supporting industries for them. We are seeing a mixed sentiment in certain areas like real estate, as you'd all be familiar with. We will be selective in supporting those different areas. The other areas of, I guess, caution might be in industries where there's been a shift in the type of consumer spend that we're seeing.
Just as an example, with the inflationary impact in the recent year, there's going to be more modest spending by the local consumers as far as going out is concerned. We'll see maybe reduced or moderated spending in eating out and other forms of entertainment. It won't be zero, but there'll be some downgrading. That's true also in the consumer space. We'll see maybe a shift in the disposable part. I think we're still going to witness some strong support for the essentials industries. Maybe I went on too much. Do you want to do a follow-up to that question, or is that sufficient?
I think that's good for now, John-C. Our next question is from Selvie Jusman. Selvie, can you unmute yourself and ask your question? Go ahead.
Hi, thank you for taking my questions. I have a couple of questions. Maybe the first question is on, I think there's the one slide that shows the risk-adjusted mean on the different products. I think that's quite an interesting slide. If I could ask you just in terms of, I think there are some fluctuations over the, I think maybe about five years that were being shown. I guess like in the in-between, there was also the cap on the interest rate and so forth. If you were to see just in terms of how things have developed so far, I guess just in terms of how much do you attribute the fluctuation to the macro factors and how much of it from your underwriting policy?
I guess what I'm trying to ask is that, in the Philippines, this is one of the markets whereby we are seeing an increase in the retail penetration. At the same time, we've seen such a vast increase in the penetration, especially in the credit cards, as well as the unsecured lending. Do you think the market is kind of ready just in terms of the affordability of the higher rates? Therefore, I guess that would mean just in terms of the credit cost, going forward. That's my first question. Maybe I will follow up later.
Okay. Let me start off with that. Yes, there's certainly some variability in terms of the risk-adjusted margins. You're right, it is affected by macro factors. Obviously, for some of the portfolios, we're able to price up as interest rates go up, and we need to price down as interest rates go down, and that affects the risk-adjusted margins. At the same time as rates go up, there is a tendency with a lag for NPLs to go up as well. Those two things, having their own movements. The NPLs tend to follow the interest rates up, but with a lag. Then rates can start to come down, but NPLs will take a bit more time to recover. That tends to lend to the variability.
It's not necessarily as soon as interest rates go up, then NPLs are going to go up as well. There's also a lag effect to that. I think, I don't know if that really answers the question that you're driving at, that is it affected by the macro factors, then yes, it is. Some portfolios, obviously, we have a little less flexibility in terms of making rate adjustments, credit card, for example, as it is now, we have a cap there, and therefore, even if interest rates were to go up further, we have no ability to raise interest rates further. Although, not that we expect interest rates to go up anymore. If that were to be the case, in credit card, we wouldn't be able to make adjustments.
I think that the change in the risk-adjusted margins mean the profitability of each product, really over time has been driven by the fact that more and more banks are entering the consumer space. You see a lot more competition in consumer loans, and you'll see margins there really come down because we're not able to really raise rates there, even if macro rates go up. The margins are still healthy, but we don't have the ability to price up as much as we did, say, five or six years ago. I don't know, Ginbee, if you want to add anything to that.
Yeah. It also is driven by the mix where we feel that the acquisition of loans will be stronger. There are lower margin risk-adjusted margins in third-party channels versus branch channels, and that's why our focus is really to get more of our lending programs up, improve our ability to score so that we can bring in more of the clients through our branch channel where we have better risk-adjusted margins. As you know, our focus remains to be our depositor base, and therefore, as long as we are able to maintain our mix and acquire more of our depositors, deepen penetration there, then we can sustain our risk-adjusted margins. As TG mentioned, our ability to price is really also driven by competition, market competition. Because consumer loans margins are very attractive, you can expect more and more competition to really enter the space.
It's healthy competition, and we welcome it certainly. We will therefore continue to improve our risk-adjusted margins through enhancements in our underwriting parameters, including our ability to use data to be able to score and acquire even more high-quality clients. The other thing that we're doing is improving our ability to recover, collect, and be the preferred bank that they will keep. These are just some of the things, some of the levers that we're doing to sustain or if not, improve risk-adjusted margins despite extreme competition.
Okay. Thank you for that. I guess my second question is a follow-up to Aakash's question earlier on the capital. Did you mention how much of it is because of the consolidations and how much of it is from the shift in mix? The reason why I ask is just I'm trying to figure out what is your comfortable capital ratio at the moment, and therefore, when it comes to your payout ratio consideration, what is the level that we should be looking at?
Yeah. If you take a look at the analytics that Eric put up, the slide, you have about 150 basis points gain in the CET1 ratio as a result of the merger just from the new capital coming in from Robinsons Bank. Because of regulatory requirements where you cannot use goodwill and all that is reduced by about roughly 95 basis points. You have a net of about 50 basis points gain on CET1 as a result of the merger. To Aakash's question, the regulatory adjustments usually just come at the end of the year because that's when we recognize the goodwill and all that stuff. On the risk-weighted adjustments, I think, Eric, correct me if I'm wrong, we were looking at this just before, but it wasn't on the slide.
We have about a 258 basis points reduction in our CET1 ratio as a result of the increase in risk-weighted assets, of which about 200 comes from the growth and about 50 comes from a change in the mix.
Right. I guess in terms of what is the range of CET1 that you are looking at to maintain?
Well, we're now at about 13.8, if I'm not mistaken, right? The regulatory requirement for us is 10.25. Obviously, we'd look at it very closely as we hit the 13 level, and the question is, what do you do then? Obviously, the decision at that point in time will be dependent on many things. For example, what is the outlook for loan growth going forward? We're also looking at the BSP to issue a new circular on, what is it called? On the operational risk, where we should get some relief from that based on historical performance. Then when you make that decision as to whether you want to bring it down or allow it or build up capital, you have a lot of leverage.
You need to look at what you think will happen for your loan growth and your risk assets, then also look at your capital, what you see earnings going forward, particularly from capital light earnings like fees. Then also, then you have the lever of whether you begin to reduce your dividend payout. Today, we're at very high at 40% because we started with a very high capital ratio. I think when we put out that policy, we were at, like, 16%, if I'm not mistaken. I don't see any need yet to reduce that payout ratio by two, three years down the road. Obviously, it's something that gives management the tool to build capital going forward.
Thanks, TG. Maybe just one last question before I join the queue. I do not know whether I missed this, but did you mention any loan growth target for 2025?
My team has a target. We don't go out and tell people what our target is. We do give guidance that we're looking at 12% this year.
12%. All right. Thank you so much. I'll go back to the queue.
Since we're on the subject of 2025 guidance, there are a couple of questions related to that. From Alison Hor of Bloomberg. She's asking, could you please repeat the guidance for 2025 on NIM, loan growth, CIR, and ROE? From Yvonne, how do you expect your mortgage book to grow in 2025 given the property market backdrop in the Philippines?
Maybe I can address the first part, which is, loan growth, as TG mentioned, about 12% overall growth in the loan book. NIMs, we expect to remain or to be, through the course of 2025, at or above the level that we ended 2024 at. You saw that, we showed that in a slide earlier at about the 4.3% level. I think we'll be able to retain that through the course of 2025. What were the other items that?
ROE and CIR.
ROE and CIR. Again, on ROE, we intend to keep NIMs at least the 15% level. On an ongoing basis, that's going to be our goal. We've maintained that over the last couple of years, 2023, 2024. We look for that to be the situation for us moving forward. On CIR, we'd like. Excuse me. Our target is to continue to gradually bring that CIR level down. As mentioned previously, since 2022, we've been gradually making progress in terms of reducing our CIR. In 2024 versus 2023, we brought it down by about 70 basis points. This year, 2025, we think we should be able to do something along those lines as well.
Okay. On the mortgage book, how do we expect it to grow in 2025, given the property market backdrop?
We're looking at growing our mortgage book at about 10%. We actually grew it in 2024 by 16%. The glut that had been published, based on what Colliers mentioned, should be seen with some perspective. If you look at the glut, it really is coming from the exit of POGOs. A lot of developers who built with that in mind, of course, naturally would have a lot of vacancies and unsold products. In BPI, our portfolio is number one, because housing loans are actually, they come when the balloon payment is due. That's about two or three years back. It's not the current inventory. Second, when you look at the complexion of our books, it's really driven not by investors, but by actual occupancy. Only 10% of the housing loan books is due to investment.
Most of these, again, 80% are coming from our own depositors. The concern on the glut will only be a concern if people are not able to pay. In the case of BPI, the asset quality of our books remains to be superior versus industry. We are 200 basis points lower in terms of NPLs. Which means that we continue to draw high quality customers, loan borrowers, and we will continue to see opportunities, particularly in areas outside of Metro Manila. Among our depositors, a big chunk already is growing, coming out of our core mass market and mid-market. These are still strong opportunities, and we see that as long as we maintain our focus on depositors, our lending programs, our underwriting parameters that consider both risk and rewards, then we should be good.
Okay. Thank you, Ginbee. Our next question in the Q&A box is from Shane Mathews of White Oak. As you stated in your presentation, you have lost CASA market share over the past three years. What led to this, i.e., underperformance versus the market? Was this led by corporate CASA decline? How are you seeing CASA development over the next few years?
On the CASA, just some perspective. Our total depositor base is primarily affluent. In the last two years, it is only this year and the latter half of last year when we really made the goal for core mass market. If you look at the needs of the affluent, they will go for yield, for higher returns. Therefore, we've seen the migration of the funds of our customers from CASA to investments, higher yielding investments, and even both. If you're comparing it versus COVID, it actually is not comparable because during COVID, liquidity is the primary concern over returns. As the economy has improved, given that we're post-COVID, you'll see, and also interest rates have moved up, we've seen the migration to higher yielding.
However, the last one and a half years wherein we see the CASA to be really strong is really on our ability to retain total funds and not just look at it from a pure CASA basis. We also look at our opportunities in the books, and we've seen that core mass market, in fact, had been able to make up for the movement in the affluent CASA. That's how we were able to do the mix. On the corporate CASA, recognizably, this is a lot of work for John- C. and I. We've been working at really developing our capability to be the main operating bank of our corporate clients. We've made some inroads. In fact, this year, our institutional banking CASA had increased.
This is really due to the initiatives of our institutional banking team together with our branch banking team to be able to capture more institutional CASA. Our initiatives on P2M, on payroll, agency banking, acquisition of clients, developing the entire ecosystem, partnerships with Ayala Malls, partnerships with Robinsons Retail, have really allowed us to increase our CASA. If you look at the mix, if there was no Robinsons acquisition, we would have retained our CASA ratio at 67%. The mix is driven, the reduction in the CASA ratio this year is driven really by more bought deposits coming from acquired portfolio from Robinsons Bank. Having said that, are we satisfied? Not yet. We would want to do more as our tagline would go. We certainly have very good initiatives that will drive CASA growth in the coming years. Just watch out for those.
Thank you, Ginbee. The second part of Shane Mathews' question, how is the bank thinking about cost growth targets going forward? What is the target CIR beyond 2025?
I think I answered that earlier. Basically, we ended the year at, I think it was 49.3%, which is a 70 basis point improvement over last year. We're looking for an improvement of something along those lines for this year as well.
Okay. Thank you, Eric. The next question comes from Elizabeth Santiago of Abacus Securities. How much would be the impact to fee income from the BSP's plans to abolish bank transfer fees?
I think right now, on each year, the transfer fees that we get from our clients totals about PHP 2 billion on an annualized basis. We're not too concerned about that. I think if the BSP does mandate free transfer fees, I think that's good for the industry. I think what it will promote is a greater movement of cash greater transactions, where we believe we will be a net beneficiary arising from the efforts we're making in the P2M space, the efforts we're making on bills payments. We actually think that free bank transfers will actually mean net cash to us going forward, and therefore increasing our, let's say, our CASA, as Ginbee says, or even just total deposits with us.
Thank you, TG. Ginbee, I think this is a follow-up from your reply earlier. Can you cite which areas outside Metro Manila, I think in terms of the opportunities you were referring to? Can you give color on the range of mortgage values that your clients are availing?
From outside of NCR, we're seeing strong growth in the North Luzon area, particularly Pampanga, Baguio, and also in the south where there's Iloilo, and also Bacolod, and Davao. We're seeing really strong growth coming from those areas. Also Lipa, Batangas area. There really are opportunities outside of Metro Manila, and even national developers are looking at those areas. I guess Bulacan, once the airport is really very sure, you'll see that area as well growing. The other question?
Mortgage values that you're seeing also availing.
Who's availing?
Mortgage values from those who avail.
We're seeing about PHP 3.5 million- PHP 5 million on the average.
Okay. Thanks, Ginbee. We have one more question in the Q&A box from Selvie Jusman. What are AI use cases that you're looking to implement further, what is the extent of efficiencies that you can achieve?
As you know, we've implemented what we call BPI Express Artificial Intelligence Assist Intelligence in the branches. We've piloted that. The use case, the efficiency, the adoption is simply amazing. 97% of our branches are using it every day and have seen the power of it. Because of that, right now it's limited to our officers because we're training the AI. This year we will expand it to include even our own staff. We're also looking at artificial intelligence to be implemented at the call center. Rico and his team are actually next in line to the branches in the implementation of artificial intelligence. You're really looking at just the GenAI at this point. We're looking at other stuff around traditional AI, like machine learning, our capability to score and hyper-personalize. That's in the pipeline, and that's where the real power is.
Beyond efficiency, it's the ability to be able to cross-sell more, to market more, to reach our clients more. In fact, because we have made Salesforce as the main platform for our CRM, embedded within Salesforce is our AI capability of Einstein, as Salesforce would say that. We're very excited to be able to adopt that and roll that out in the coming years.
Thank you, Ginbee. Before I go to the question in the Q&A box, is there anyone here on-site who would like to ask a question? Anyone? I'll proceed to the questions here on the Q&A box. From Yvonne. While your CASA market share fell, which are the banks that gained market share? In your view, what did they do right?
We've seen the CASA market share of Landbank, naturally, we know why that is improved. We've also seen the second-tier banks like RCBC, that's because of special savings products, which actually is not necessarily CASA because it's high rate. There are many ways by which you can skin the cat when it comes to CASA. When you really look at BPI's CASA ratio, that's core CASA. That's really operating accounts, transactional accounts that are there because people need to transact daily, and therefore it's not the rate that's important, right? It's not the rate that's critical. It's the ability to access their funds anytime, anywhere. That's on the CASA.
I think it's worth noting the math. There's this obsession with CASA market share, right? When you think about it, prior to the rates going up in the country, a lot of people kept idle cash and were not too diligent about their cash. Particularly for BPI, where over, today, I think 62%, 65% of our CASA comes from the affluent segment. As interest rates went up, the affluent segment becomes more diligent about their funds, and they move more and more of their CASA towards time deposits, which means that the total CASA reduces in amount, and we take a loss in market share, even though we don't lose any CASA relative to the others.
Their market share will go up just because total CASA goes down. I think people should take that in perspective. You should take a look at total deposits as well as CASA deposits when you try to analyze whether a bank is truly losing market share or whether losing market share is actually detrimental to one's performance or not.
Okay. Thank you, TG. There's a question from Dionill Jamil of ATRAM. Can you comment on current competitive environment, both in deposits and loans, and its effects on pricing?
Well, maybe I'll ask Dino also to talk about the markets and where rates are going. What we're seeing today is that there are a number of banks that are being very aggressive in trying to boost their market share on the loan side, and are able to or are willing to lend to clients at the rates below the BSP. We certainly participate in some of that for our top clients because we look at total profitability, total relationship profitability. I think we are very disciplined about our pricing, both on deposits, when we take the high cost deposits from clients or when we release loans. I don't know, Dino, you might want to make a comment why the market seems to have some still loans being priced at below BSP.
Well, TG, beyond market share, I don't know why loans are priced so competitively at this point. Perhaps there are incentives to doing so, like tax positions, because over the past few years, we know that the securities portfolios of banks increased significantly, especially during the pandemic years. Some banks still are holding on to those portfolios. It's still a big part of their total assets, which I think makes them still probably on the negative tax position side. That's why they are hanging on to loans as best they can because it helps them be more efficient or to cure that negative tax position. That's aside from the competitive story. I think it's also about taxes. Thank you.
Thanks, Dino. This one is for Ginbee. It's a follow-up question on the mortgage book. May you kindly share the average amortization rate for those in the PHP 3.5 million-PHP 5 million range? Given the rate cuts in the horizon, can you provide guidance on the trajectory of your average amortization rates?
Maybe the pay down rate. The pay down of our mortgage book's about 17%. As long as we're able to increase ability to acquire new loans, we will continue to grow our portfolio book. That's why we're looking at 10% as a portfolio loan growth, which means that we need to acquire at the rate of 20% in terms of releases, or more.
Okay. Thank you, Ginbee. I have no more questions here on the chat box or online. Anyone here on-site who would like to ask a question before we close? I guess none. Thank you very much for all your questions. Before we end the call, may we call on TG for some final thoughts.
Just close and thank everyone for your participation in today's earnings call. Looking forward, I think that 2025 will be another banner year for BPI. We continue to execute very strongly on the strategies that we implemented, that we decided on three years ago. We are continuing to make big moves in expanding our network, our channels through our agency bank, through redesigning and rethinking our branch network, and of course, continuing to make the technology investments that will make our apps best in class and best in user experience. Secondly, we're putting a lot of focus this year on our corporate business. We are making a big effort to try to improve our transaction banking business. There's a lot of emphasis both on the technology side, the product side, the marketing side, and the relationship side. We are also being very focused on our payments.
I've asked Boyie to lead that, I guess, exercise and try to get a bigger share of the payment space today, as I think it becomes a lot more skewed towards the banking industry as person-to-person payments go to zero. Finally, we're looking forward to, I think, a change in the way the markets will operate, as we are able to launch a product sometime in the second half of the year, where we will greatly expand the number of doors where our customers can actually do their deposits and their withdrawals through our agency banking partners. Today, we have about 120, 130 doors that can do that in the provincial areas. We're hoping that by mid-year, we will roll it out with several institutional partners and bring that count to, I think, 5,000, Ravy? 5,000. About 5,000 doors.
All in all, I think it's going to be a very exciting year for BPI, 2025. We will continue on the strength of execution that we've demonstrated in the last three years, and we continue to be very diligent and very focused on the kinds of returns that we wish to give to our shareholders going forward. Thank you again.
Thank you, TG. Thank you, TG and Eric, and to the BPI senior leadership team here. Ladies and gentlemen, this concludes today's earnings call. Thank you for your participation. To those joining us online, you may now disconnect. For those here on-site, please join us for some refreshments. Thank you.