Good afternoon, everyone, to those present here on site, as well as those who have dialed in on Zoom. This afternoon, we welcome you to our earnings call to discuss BPI's second quarter and first half results. I am Chinky Lucban, 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 Tower Two of Ayala Triangle Gardens, Makati City, while the rest of our participants are dialing in remotely. I am pleased to introduce you to our speakers and panelists this afternoon. First, TG Limcaoco, our President and CEO. Eric Luchangco, our Chief Finance Officer and Chief Sustainability Officer.
They will be joined in the panel for the Q&A session after the presentation by Maria Cristina Go, Head of Consumer Banking. Maria Theresa D. Marcial, Head of our private wealth business. Jojo Ocampo, Head of mass retail products. Juan Carlos L. Syquia, Head of Institutional Banking, and Elfren Antonio S. Sarte, Head of our BPI Payment 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 K. Limcaoco, followed by our CFO, Eric Roberto M. Luchangco, who will walk you through the second quarter and first half performance highlights, digital and sustainability updates. The floor will then be open to questions from the audience, both on site and on the call. Just to let you know, this call is being recorded and legal disclaimers apply.
Now let me turn the microphone over to TG for his opening remarks.
Thank you, Chinky, and good afternoon to everyone joining us both here at the 27th floor at BPI and also virtually through Zoom or Microsoft Teams. Gives me great pleasure this afternoon to welcome all of you to this earnings briefing. As our CFO, Eric Luchangco, will explain, the first half of the year continued to show strong growth. Our net income of PHP 30.6 billion for the first six months of the year is 22% higher than that of last year. Our second quarter results were relatively flat to quarter one, both at about PHP 15.3 billion. As Eric will explain, this was really driven by the fact that we had several one-offs in expenses that were either one-time expenses or expenses that were accrued in quarter two that should have been accrued in quarter one.
The results for the first half were really driven by continued strong loan growth, a shift of our portfolio towards more non-institutional banking loans, which have a much higher NIM, better NIMs all across, where NIMs continued to expand in the second quarter, and strong non-interest income despite weaker trading income as a result of the higher rates in April. Our fees for the second half of the year were really driven by continued strong fees in both cards and wealth, and we will have a special section on what we are doing on our wealth business for this afternoon's presentation.
As I said, our higher OpEx for the second quarter was driven by several one-offs, particularly with manpower expenses arising out of accruals of bonuses and the results of the negotiations for CBA, which we concluded in April, as well as accruals that we did in the second quarter that were meant for the first quarter. We ended the six months with slightly higher NPL, as we will also explain. This was driven by several test programs, particularly in the cards and the personal loan business. We expect these test programs to roll off and therefore result in lowering of the NPLs going forward. All in all, I congratulate our team for a wonderful first six months. Our ROE remains higher than 15%.
Our jaws for the first half of the year continued to widen. Our revenues were higher than our growth in our expenses. Finally, we will end the presentation with an update on our digital initiatives as well as some of the new products that we're doing, both to bring about financial inclusion as well as an update on our agency banking. With that, let me turn this over to our CFO, Eric. Eric?
Thank you, TG. And good afternoon, and thank you to everybody joining us both physically and by Zoom. Let me get started on my report. We're happy to report another solid quarter performance supported by volume growth in all of our business. Our results also show that the strong momentum from previous quarters remains intact. This is the second quarter that integrates RBC figures, and just like in the first quarter, we'll call out the impact of RBC where we see it as relevant. Just to get started, our profitability. We are pleased to report that we delivered a record PHP 30.6 billion in after-tax earnings for the first six months of the year, driven by strong revenues and positive operating leverage.
Second quarter net income of PHP 15.3 billion just squeezed past last year's previous record by 0.3%, and we'll elaborate on that in the coming slides. Profitability further improved with annualized ROE at 15.5% and ROA at 2%. On the balance sheet, loans and deposits continued to grow at year-on-year 17.4% and 14.4% respectively. The capital position moderated slightly, reflecting a strong pace of loan growth and capital distribution. However, indicative CET1 at 14.2% and CAR at 15.0% were still well above regulatory and internal thresholds. There was an uptick in the NPL ratio to 2.2%, driven by a focus on the high yield, higher yielding loan segment.
NPL cover remains more than sufficient at 127.6%. Credit cost is still below pre-pandemic levels, and our asset quality remains more favorable than industry averages. We expanded our client base, reaching 12.5 million customers and increased our client engagements. We continue to deliver on our digital agenda with the launch of new product, Salary On-Demand, and continuing to add new features to our existing platforms. We are very excited about the new P2M facility to enhance customer engagement and conversion rates, and we further enhanced our leadership in sustainability. Taking a deeper look into our first semester performance, we delivered a net income of PHP 30.56 billion, up 21.5% year-on-year, driven by revenues which offset the increase in operating expenses and provisions.
Net interest income at PHP 61.25 billion was up 22.2% year-over-year, attributed to strong loans growth and higher NIM. Trading income dipped to PHP 74 million, down 18% year-over-year, given a tough trading environment where interest rates were up across the yield curve by an average of 48 basis points year to date. Also because of base effects, with our securities position reflecting the impact of trading in the fourth quarter of last year, when we took advantage of the relatively lower rates to boost our trading income. Forex income was up 58.6%, largely on an increase in client count and volume from improved client servicing. Fee income at PHP 16.99 billion gained 28.8% year-over-year.
Total revenues at PHP 81.18 billion was up 23.8% year-on-year, while operating expenses at PHP 38.27 billion were up 21.9%. These were driven by a growth in business volumes, technology costs, technology, manpower, and marketing costs. Provisions at PHP 3 billion was 50% higher compared to previous year, which brought net income to PHP 30.56 billion, again up 22%, giving us a slightly positive jaw. Looking at the sequential quarter performance, net income of PHP 15.3 billion for the quarter was modestly up compared to the previous quarter due to higher OpEx from a few one-off expenses, which we will detail in a later slide. Excluding these expenses, the pre-provisioning operating profit would be up 5.1% and net income up 8.3% quarter-on-quarter.
Despite a high base in the first quarter of 2024, the strong revenue momentum remained intact, with net interest income up 5.2% and non-interest income up 5.9% year-on-year. Trading income was the most notable decline, driven by the rise in interest rates in April. Fortunately, we've seen some retracement in the months following, allowing us to claw back some of those losses, and we believe the outlook is good for the second half under our forecast of at least two more rate cuts before year end. Net income managed to remain above PHP 15 billion for the second consecutive quarter.
Earnings per share for the first semester was at PHP 5.80, a 14% increase from last year, notwithstanding the additional outstanding shares from the RBC merger, which was effective starting January. This earnings per share is actually higher than the full year earnings per share in 2021. The higher earnings further improved profitability, driving ROE to 15.5% and ROA to 2%, the highest levels we've seen since 2016. The solid performance drove a strong and consistent growth in dividends. For the first half of the year, the bank declared a dividend of PHP 1.98 per share, up 17.8% from last year and 87% from previous years.
This is equivalent to a payout ratio of 20% of 2023's full year income, which if we match in the second half, will maintain our recent payout ratio of 40% of prior year's net income. Total resources for the bank stood at PHP 3.11 trillion, up 1.4% quarter-on-quarter and 15.8% year-on-year. Loans stood at PHP 2.09 trillion, while deposits were at PHP 2.45 trillion, up 17.4% and 14.4% year-on-year respectively. Excluding the amount of loans and deposits brought about by RBC on day one, loan growth would be at 10.9% and deposits at 7.5%, reflecting a sustained organic growth. As shared in our previous meetings, we continue to manage deposit growth, which has stabilized our CASA ratio.
Our loan to deposit ratio stood at 85%, up 103 basis points on sequential quarter on persistent loan growth, which should support our NIM. Moving on to our loans and our NIM, we continue to see positive trends with loans, which stood at PHP 2.09 trillion, up 17.4% year-on-year, and 2.4% quarter-on-quarter. We continued to see continuing the trend of previous quarters, NIM increased in the sequential quarter by 13 basis points to 4.32% and by 22 basis points from last year, driven by continued recovery in asset yields, coupled with a tempered increase in cost of funds.
We attribute the continued increase in NIMs to interest rates remaining elevated, a managed deposit growth, not chasing yields and market share, an increase in the loan to deposit ratio to 85% and increasing high yield segment in the loan mix at 26.6% from 22.5% last year. In terms of contribution to gross income, 40% of the gross interest income is accounted for by this higher yielding loan segment, which is up from 35% last year. We attribute this segment's strong growth compared to institutional and the yield differential of about 600 basis points, notwithstanding the transmission of higher interest rates in institutional loans.
As to the sensitivity of NIM changes in interest rates, we estimate 8 basis point sensitivity for every 25 basis point movement in BSP policy rate and 5 basis point increase in NIM for every 1 percentage point cut in RRR. Looking at the loans broken up by segments, we see a continuing trend from the previous quarters with all loan segments posting solid year-on-year growth, led by personal loans up 129%, business bank or SME up 73%, microfinance up 67%, followed by auto loans up 37%, credit cards at 35%, and mortgage, which despite posting the lowest growth among the consumer segments, was still up 32%.
Finally, I think on our part, expectedly, institutional posted the slowest loan growth, but was at 11%. Collectively, the high yield segment grew 39% year-on-year, outpacing the growth in the institutional loan book, further shifting the loan mix in favor of non-institutional loans, which now account for just 26.6% of the total loans, with the total loans to the non-institutional segment up 413 basis points from last year. The same trend applied to sequential quarter growth as well. Business bank was up 24.6%, microfinance up 12.7%, credit card up 9.4%, personal loans up 7.1%, and auto loans up 5.4%.
Mortgage posted the lowest growth among consumer segments at 3.4%, but has been up for 12 consecutive months now with home loan releases at PHP 9.6 billion in June, which is up 9.3% versus last year. Real estate markets have been recovering, but beyond this, the team has also improved its market share by applying a hyper-personalized marketing strategy and expanding its partnerships with BPI, now the top partner of several key residential developers, including Ayala Land, Robinsons Land, and Ortigas Land. In institutional banking, loans were only up in volume 1% quarter-on-quarter, but which has allowed us to continue to drive profitability with the asset yield in institutional banking continuing to move upward quarter-on-quarter, even without the tailwinds from new policy rate increases. Asset quality was consistent with our expectations.
A slight uptick in NPL ratio to 2.2%, up 26 basis points from December and 32 basis points from last year was driven by a shift towards the high yield segment. Credit costs remain contained at 30 basis points in line with guidance to partly cover new NPL formation while allowing the total cover, NPL cover to decline. Our buffer for loan losses remains sufficient, with NPL cover at 127.6% and total collateral cover at 200%. In addition, our confidence in the sufficiency of our NPL cover is underpinned by our view on the economy, our robust credit underwriting framework, and the proactive loan monitoring that follows once we book loans. On this slide, we show the NPL ratios for each of the loan segments.
You'll note that credit card and NPL, credit card and personal loan NPL ratios are up 72 basis points to 5.24% and 19 basis points to 5.49%. For each of those segments, for the quarter. I'll discuss that in a little more detail in the next slide to give you a little more color, but wanted to discuss some of the other loan segments briefly first. On the business banking or SME portfolio for microfinance and auto delinquencies, we're seeing declines every month in the last quarter, while those of institutional and mortgage loans have been largely stable. Business banking and microfinance portfolio drops have been quite remarkable, with new bookings over the last year showing low delinquency.
As you may recall, we actually track microfinance on a 10-day basis, but we present here the 91-day figures to make it easy to compare its performance. So you see there 9.976% is the 10-day, and then for the 91-day NPL ratio is 6.07%. Again, I wanted to give a little more color on what we're seeing on the NPL ratio for credit cards and personal loans, which showed the greatest deterioration in asset quality recently. Although through the course of last year, we conducted a test run using a newly developed scorecard that we applied for both of these portfolios. This scorecard incorporated over 100 variables.
Overall, we consider the test to have been successful, and we believe that it will help us identify additional leads that will help us generate additional bookings in the billions of PHP. Like many good credit experiments, however, we extended loans to both good and poor performers, which helped us identify the right thresholds on which to apply the scorecards. Knowing that if you don't have any bad loans, then you don't know where the bottom limits should be. We're presenting here, and you'll see, for the credit cards and personal loans, graphs what the NPLs would have been if we had not conducted the experiment.
Basically, we've removed all of the loans, both the good and the bad loans, that were acquired as a result of that test with this new scorecard. Looking at that, the card NPLs would have been 4.35%, and personal loan NPLs would have been 5.13%. Furthermore, the NPL for the overall bank would also be down to 2.13%. Now this is not to pretend that that test didn't happen, but the reason for showing this is to give you an idea of what we're seeing in terms of a like-for-like comparison in terms of asset quality. The asset quality of our book, what it would have been if we had kept the status quo and not run this test.
I believe what this shows is that the overall environment in which we continue to operate is not deteriorating as quickly as might otherwise be believed if you just looked at the headline numbers. The test program is helping us find new addressable markets and is in line with our continuing strategy to optimize our risk appetite and improve our performance in consumer loans. Even with the increase in the NPL ratio since December, the risk-adjusted margins of credit card and personal loans remain attractive. If you look at where our credit card book is, we ended 2021 with a credit card book of PHP 76 billion and a yield of approximately 13%. Today, that book is PHP 157 billion with a yield of 18%.
That differential is worth about PHP 18 billion in annualized interest income, plus the fact that the portfolio generates fee income, which is, as I'll show in the next few slides, generated about PHP 2.7 billion for the first semester alone. Again, that's just to give you a bit of color about what we're seeing in the consumer loan sector. Looking at our funding sources, we further strengthened our deposit franchise with our mass market customer segment, showing consistently strong deposit growth in the past six months while maintaining the highest CASA ratio among our market segments. Deposits from our mass market segment was up 190% year-on-year and 30% quarter-on-quarter.
This strong deposit growth is attributed to superior account opening capabilities with multiple channels, for example, via mobile, BPI Mobile, GCash, agency banking, and of course, continuing via the branches as well. Products that are relevant to mass market, including digital deposit products, with no maintaining deposit balance. Various initiatives to help broaden the base of segments, to help manage their finances, including targeted programs to pursue OFWs and payroll markets. Finally, enhanced digital capabilities, which increase the utility value of the deposit accounts, like ease of doing funds transfers, paying bills, and our just recently launched P2M, paying merchants in stores. This, coupled with improved security features, led to greater confidence in transacting digitally. Our CASA ratio has stabilized at about 65%.
As an additional source of funding, we tapped the bond market twice this year. Subscription is still ongoing until August 2 for our second issuance of a 1.5-year peso-denominated bond priced at 12.36 basis points over BVAL with a coupon of 6.2%. We also issued a five-year dollar bond in March with a 5.25% coupon, which was 3.3x oversubscribed and priced at 105 basis points over U.S. Treasuries, the tightest spread ever on a five-year bond from a non-sovereign Philippine issuer. Under the current environment, bonds are emerging as a cheaper funding source than time deposits, particularly the sustainability-linked bonds, which is why we're seeing an increasing amount of usage. Moving forward, we expect to tap the market more proactively as a more efficient source of funding.
Fee income reached PHP 8.99 billion, up 30.4% year-on-year and 12.3% quarter-on-quarter. With all of our businesses contributing to our target. Growth was led by our biggest businesses. Credit cards was up 30.7% year-on-year with a 23% growth in retail billings, fueled by the 16% increase in active customer count. Wealth management up 16.7% year-on-year, with all-time high level of assets under management at PHP 1.4 trillion, up 17% year-on-year and 2.5% quarter-on-quarter, driven by client fund inflows and to a smaller extent asset valuation as well.
Insurance was up 129.4% year-on-year due to equity income from investments in BPI-MS and AIA and branch commission on new insurance product. ATM and digital channels up 12.5% year-on-year from 38% increase in API transactions from the onboarding of additional partners this year, bringing the count of our partners to 106, providing nearly 15,000 products and services, as well as the 87% increase in interbank fund transfers and the 173% increase in partner merchant transactions. Transaction banking was up 20.9% year-on-year, driven by higher cash management fees from Robinsons Bank's merchant acquiring business and increased trade and supply chain fees, both from new deals closed and from expanded engagements with existing clients.
Remittance fees up 14.2% on a 46% increase in InstaPay transaction count and 26% increase in inward remittance transactions due to high growth in the use of e-wallets. Above increases were partly offset by securities and investment banking businesses, down 44.6% due to less projects with higher fees this year versus last year, and asset sales and rental fees, which also declined due to the asset sales related to the FIST Act that we had last year. I also wanted to highlight some of the gains made in our wealth management business. As of June, AUM reached PHP 1.3 trillion, up 17%, backed by consistent fund inflows. The business achieved its highest market share of 20.54% in the trust industry as of first quarter of 2024, outpacing its key competitors.
For combined UITF and mutual funds, market share is up 103 basis points to 36.09%, while market share in employee benefits funds was up 48 basis points to 29.49%. In 2023, BPI Wealth launched its signature experience to elevate the private banking experience of high-net-worth clients. With the introduction of flagship solutions like wealth loans and multifamily office, personal fund, personal management trust, and admin agency services, BPI Wealth has enhanced its revenue streams. In terms of digitalization, BPI Wealth was the first in the country to offer digital account opening for segregated portfolios launched in May this year. This is in addition to an existing facility that allows digital account opening for investment funds, which, for the first six months of the year, has already posted a 207% increase in AUM.
To widen the distribution of its investment funds, BPI Wealth forged a partnership with COL Financial to make select UITFs accessible through their platform beginning next month. For the first semester of the year, BPI Wealth fee income was up 17% year-on-year and contributed 16% to the bank's total fee income in a capital-light business. On the expense side, operating expenses stood at, for the second quarter, PHP 20.3 billion, up 24.1% year-on-year on manpower, technology, and marketing expenses. Manpower cost was up PHP 2.1 billion or 37% in large part due to the increase in total headcount following the merger with Robinsons Bank. The current total headcount stands at 22,147 people and is up 13% from last year.
Premises costs up 16.5% year-over-year were mainly driven by the inclusion of Robinsons Bank and Legaspi Savings Bank branches and increases in BPI branches expenses for various contractual services. Technology costs at PHP 4.1 billion are up 31.1% year-over-year on continued investments in digitalization and increase in the number of transactions. For the second quarter, about 20% of tech spend was on what we call build the bank, which includes investments in platforms and integration of RBC, while 80% was on running the bank, which includes the software and various cloud subscriptions and IT SaaS related expenses. Other expenses were up 10.5% on increases in marketing expenses and third party fees for sales incentives in credit cards, partly offset by a decrease in rewards expenses.
The operating costs were partially offset by the impact of efficiency initiatives. Our year-to-date cost income ratio at 47.1% was lower than the 47.9% over the same period of last year. On this slide, I just want to give a further explanation on the expenses for the second quarter, and to show that the increases were moderate if we exclude the one-off expenses in manpower and delays in the booking of tech expenses, which were taken up in the second quarter. Recall on the earlier slide, we showed OpEx for the second quarter at PHP 20.26 billion, and so you see it on this slide in the third column.
Which was up 12.5% on the sequential quarter of PHP 18.01 billion, which you see in the first column. It was driven mainly by manpower up 16.3% and technology costs up 31.4%. We do wanna note, however, that the manpower cost of the second quarter includes one-off expenses related to CBA and employee benefits and incentives amounting to PHP 776 million. In addition, the tech cost for the second quarter includes 219 million of expenses, which should actually have been booked in the first quarter but were delayed and therefore, in terms of the invoicing and payment, and therefore ended up in the second quarter.
All told, adjusting for these changes, expenses in the second quarter would have been PHP 19.27 billion, which is only up 5.7% on the sequential quarter. The pre-provision operating profit would be PHP 22.3 billion, which would be up 5.1%, and net income would have been PHP 16.3 billion or up 8.3%. What we're trying to just show here is that the growth in expenses in the second quarter was not as severe on a run rate basis as might have been that is otherwise implied by the actual numbers that were posted. Moving on to our capital.
Our CET1 capital was at PHP 350 billion, up PHP 46.6 billion from last year, and PHP 400 million from the previous quarter on net income accretion and additional shares issued for the merger. Capital ratios remained robust, notwithstanding the increase in risk-weighted assets from strong loans expansion and increase in capital distribution. CET1 stood at 14.22% and CAR at 14.99%. Though lower year-on-year, the ratios remained well above regulatory and internal thresholds and sufficient to support continued loan expansion. Okay, now let me provide a brief update on our client engagement platforms and the new and upcoming features which you see above, as well as the key metrics we monitor, which are detailed on the slide below.
On VYBE, we have over 1 million signups, 16% of which are new to bank, including those onboarded without the need of an ID. Public launch will be in the third quarter. On the new BPI app, which features, among others, online check deposit, will soon allow cardless withdrawal as well. We have 7.2 million enrolled and 4.7 million active users in our BPI app. We launched our new BPI Trade app in March, and we successfully migrated all clients from the old to the new platform by April. Transaction count has increased by 53% in June compared to May, and the new platform now accounts for 45% of the year-to-date volume.
We have 378,000 enrollees on BanKo, up 14% from last year, and about 23,000 enrollees in BizKo. On BizLink, we have a 41% penetration rate on an expanding client base, and that the number of transactions on the platform is up 65% year-over-year. Lastly, on our BPI Wealth Online, for high net worth individuals, we have 13,000 enrolled since the launch in April. We continue to expand our retail client base, which reached 12.38 million as of June, adding nearly a million clients year to date. 58% of them were onboarded via digital platforms.
Our efforts to convert clients to be digital are reflected in the growth of our digital clients, which now stands at 5.14 million or 41% of our total retail clients, up from 22% in 2021. In terms of engagement, digital customers had about 4.3x more transactions than non-digital customers during June, resulting in 1.6x more revenue per capital compared to non-digital clients. Moving on to some product updates. In January, we officially launched BPI Salary On-Demand, which allows employees to instantly access their earned salary in advance anytime, anywhere. The product is available in the PayWage app, and employees may withdraw up to 30% of their earned salary in advance with just a few taps. Since Salary On-Demand is not a loan, it is interest-free, but subject to a fixed processing fee.
The product is designed to complement BPI's payroll solution and offered exclusively to our BPI payroll clients for now. BPI handles payroll for about 4,500 companies with about 2 million total employees. As of July, we have 50 companies with 30,000 employees amongst them enrolled in SoD. We will also be offering this SoD direct to employees to accelerate our market reach. On agency banking, last year our focus was to establish partnerships to set up partner stores, and to date, we have 18 retail brands with nearly 5,800 partner doors where one can apply for a BPI product. This year, we are shifting our focus to partner store activation, product selling, and the launch of transactions to further boost client takeout.
We also recently launched the agency partner portal, which allows rural retail partners to function like a BPI branch with their capability to accept deposit and withdrawal transactions. This will declog bank branches and enable them to focus on more client relationship building. We will pilot this capability to 20 partner doors with an official rollout in Cebu on August 5. Under agency banking, we recently launched a merchant payment solution to grow the Person-to-Merchant, or P2M, business. With the volume of digital payments growing substantially, it's imperative for BPI to win merchants and educate clients on digital payments. Many QR payment users still don't realize that QRPH codes are standardized and can be scanned by any bank or wallet.
Our merchant payment solution enables merchants to accept QR payments from any bank or wallet, facilitating seamless payment processing and allowing businesses to streamline their operations. Through our e-payment portal, merchants can conveniently manage, track, and reconcile transactions. Utilizing our P2M facility will not only strengthen relationships, but boost deposit volumes. As of July 20, we have signed up 896 merchants. Before we wrap up, I also wanted to add some notes on some of the growth we've been seeing from the merger with Robinsons Bank, comparing the performance of Q1 during which RBC branches were mostly operating as normal while transitioning into becoming part of the BPI Group, versus Q2 during which we've seen some of the transaction or some of the transition process already start to take root.
You see deposits from the Gokongwei and Robinsons ecosystem grew 10% from PHP 58 billion in quarter one to PHP 63.9 billion in quarter two. The Teachers' Loan business under Legaspi Savings Bank started to benefit from the scale that BPI brings to the table, and the portfolio grew almost 17%, quarter-on-quarter, from quarter one to quarter two. This is just the beginning, though, and we expect this growth to accelerate even further, having just secured BSP approval to market Teachers' Loans through BPI branches. 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 Q1 to Q2, we've seen growth of 53% in count and 169% in value as the RBC branch teams have started to realize the benefits of being part of the BPI group. Finally, on the next two slides, we just want to list some of the institutional awards and recognitions garnered by BPI from reputable foreign and local award-giving bodies in the first semester of the year. We provide copies of this, so we don't need to run through it individually. We can move on to the next slide. Again, because we all wouldn't fit into one slide, we have them here.
Finally, some specifically ESG-focused initiatives as well, with us having garnered 11 ESG-focused awards as of July 2024. Yes. Okay. Just to run through some of our sustainability-related achievements. BPI continues to further boost its sustainability efforts across both the banking and operations side. BPI launched LavLoans, which is a specialized financing service for cancer patients and their families. The product is named after the color lavender, symbolizing the support for cancer patients. We also launched Agri-Negosyo Loan program in partnership with agritech company, Agrilever, which is aimed at helping farmers strengthen their agricultural practices.
BPI launched a new BPI Wealth platform for wealth management clients, and BPI revamped its BPI Trade app for equities trading, further increasing our digitalization efforts. BPI launched a renewable energy referral program in partnership with ACEN, where we offer, or where we refer renewable energy supply to clients eligible under the Green Energy Option program. We also became the first bank to partner with DHL for the use of sustainable aviation fuel in the shipping of parcels and documents. We also launched a recycling program for old BPI uniforms and red shirts. Finally, in June, we spearheaded the 2024 Sustainability Awareness Month to increase awareness of sustainability and our initiatives in that effort.
BPI also became the only Philippine bank and leading financial institution to join the UN Global Compact Network Philippines. In summary, on profitability, we delivered yet another strong quarter of operating performance with record income carrying forward the positive trends of previous quarters. On the balance sheet, we posted strong organic growth, further boosted by the RBC merger. Our liquidity and capital positions remain strong. On asset quality, there's been a slight uptick in NPL ratio aligned with our plans, but nevertheless, the NPLs remain managed with ample cover. Lastly, on digital and sustainability efforts, we further strengthened our lead with our innovative digital products and solutions and sustainability initiatives. We also continue on our path of financial inclusion through adding more and more customers. Overall, we're encouraged by our operating results in the first semester.
While risks and uncertainties remain, we are confident that the strength of our balance sheet, our market-leading diversified businesses, and prudent risk management positions us well to perform moving forward. Thank you, and we open the floor to questions.
Thank you, Eric. May we ask the BPI senior leadership team to come forward. We'll have the chairs facing the audience at this time. Okay. So joining TG and Eric in front are Jin Bigo, Head of Consumer Banking; Tere Marcial, Head of our Private Wealth Business; Jojo Ocampo, Head of our Mass Retail Products; Juan Syquia, Head of Institutional Banking; and Boyie Sarte of the Head of our Payments Council. Okay. We have the microphone here in front. Yeah. The microphone for the audience as well. Okay. All right. We'll start with a question that was sent in through Zoom. This is from Joahnna Soriano of BofA. Do you expect the PSE to make adjustments to your reported free float of 54% to account for strategic holders, shareholders?
Number two, how much of marketing costs is associated with your growing cards business? And number three, when do you expect to fully shed the NPLs associated with the test project? What's the risk-adjusted NPL cover? And may we confirm that the bank remains comfortable with maintaining an NPL cover of approximately 100%?
Let me just take that first, the first one, which was on the PSE, the free float. That one we're still in discussions on, so I don't wanna preempt where that's gonna go. We'll just maybe wait to see where that comes out in and through the course of our discussions with PSE.
How much of marketing costs is associated with your growing cards business?
Our marketing expenses for credit cards for AMP is about PHP 200 million. That would be about, Kathy, our total marketing expenses if credit cards is PHP 200 million. It's about 20% of the total marketing expense.
Okay. The third is, when do you expect to fully shed the NPLs associated with the test project?
Oh, okay.
That's the CRISPR.
Yeah, the CRISPR test.
Yeah.
What we've done for CRISPR is we've actually recalibrated the cut-off scores. Knowing that, knowing what we know, for example, we've totally stopped the CRISPR test for personal loans. For credit card, we have actually increased the cut-off for CRISPR. We expect that, NPLs will stabilize. If not, we should see that coming down.
Okay.
When do you like?
We would be finished writing off about by this. We're writing off in July, and we're writing off about in August or September, we would have finished writing off all the 180 days past due. By way of perspective, we do not automatically write off, which is very different from the standard industry practice of automatically writing off at 180 days past due. That's because we continue to recover from accounts even if they are at 180 days past due. Only if there is no more chance of recovery do we write off. That's the difference between our practice and industry practice.
I guess, Eric, may we confirm that the bank remains comfortable with maintaining an NPL cover of approximately 100%?
Yes. I mean, given our current outlook for the economy and the way the environment in which we're operating, we think that level is reasonable.
Okay. Thank you. There's a question from Alison Ho of Bloomberg. Is there any guidance for 2024 full year loan growth?
We remain kind of steady due to what we've communicated in the past, loan growth in the 10%-12% level on an organic basis.
Okay. Thank you, Eric. We have one question also from the Zoom call. Yvonne, we can unmute your line, and then go ahead, please.
Thank you. Can you hear me?
Yvonne?
Hi. Yeah, can you hear me?
Hello, can you hear me? I see Yvonne trying to speak.
It's not.
Okay, we'll get back to Yvonne. Anybody here on the floor who would like to ask a question? Alfred-
Thank you.
of CLSA. Go ahead.
Yeah, just a quick question on your CET1 ratio. Like, it's actually declined a bit from the 15% level to 14-something. Can you provide an outlook for that? I mean, what's your expected capital burn or whatever in the next six months or 12 months? Yeah.
We believe that at the end of the year, we should be able to maintain the CET1 ratio in the 14% range. We'll probably see some further reduction in that range heading into year-end or by year-end. We believe it should still remain within that 14% range.
Okay. Anybody else on the floor? If none, we'll take some questions from the Zoom, from the virtual audience. Do you have numbers on the impact of RBC merger to BPI's NPL?
Sorry, BPI's merger?
Impact of RBC merger to BPI's NPLs. I guess NPLs coming from the RBC portfolio.
Yeah, we did. What was that, 212?
Yes.
Yeah.
2:12.
Yeah, it was 212.
In the first quarter.
If in the first quarter without RBC, it would have been 212.
I think the reason we do that is that we only talk about the first quarter because we're not growing the RBC portfolio going forward. We consider it part of the BPI portfolio. In Q1, without RBC, it would have been 2.12. Going forward, we don't talk about any more of the RBC loans because obviously as those RBC loans roll off the book, the bad loans on RBC will raise the RBC NPL. It's meaningless to talk about it going forward.
From Sean Sao. On slide 14, you mentioned 190% year-on-year growth for mass market, 7% quarter-on-quarter. How big is the deposit base for this currently versus institutional, and how is institutional deposit growth?
Core mass market is about 47%.
Institutional is roughly about a third.
About, uh-
About 30% of the,
Yeah
total.
Of the total portfolio. Right now about PHP 500 million is institutional banking.
Yes.
billion.
Okay. On the guided NIM sensitivity, does this include in-house assumptions on loan growth and loan book mix moving towards consumer?
No.
It doesn't include loan book growth and loan mix moving forward. Okay. Any other questions from the floor? Okay, wait. I see a question from Yvonne. Number one, what are the key variables you looked at under your new credit score model, and how is it different from the existing or previous model? I think, Go, this refers to CRISPR.
Okay, yeah. This refers to the CRISPR score. Traditionally, we would look at deposit ADB as the primary factor for our pre-qualification campaigns. The CRISPR model has about 100 variables which include, among others, for example, payment behavior, funds transfers, top up, net payroll credits and the like.
Okay. Her other question is on what were your key takeaways from the test? Based on that, how much more do you plan to grow your credit card and personal loans as a percentage of your total loan portfolio?
Okay. Well, the key takeaways is really that when we test and we use alternative scores, this may show some increase in NPLs. However, the incremental risk-adjusted margins will be more than sufficient to make up for these tests. To be specific, for example, the risk-adjusted margin for a credit card year-over-year, despite the uptick in our NPL, has grown by about PHP 1.7 billion. And this is because we have actually with these credit tests, we have allowed more customers and new to BPI and new to credit customers to come into the bank. We are talking to a totally new demographic who are actually the kind of client that we like because these are the revolvers.
To be specific, for example, the revolver rate as a result of these tests has gone up from about 58% to 62%. That has resulted in an increase in revenue as well as our risk-adjusted margins. Most importantly, it has resulted in market share gains for the brand for BPI. BPI is now solidly the second-largest credit card issuer in the country. We have grown our credit card customers by 14%. We have grown our billings by 35% and our credit card loans by the same amount. Therefore, our market shares have increased by at least 100 basis points, and we are now at 19% in customer base, 18% in billings, and 20% in billings and 19.8% in credit card loans.
We have narrowed the gap with the market leader by about PHP 2 billion, and we have widened the gap versus the number three player from PHP 1.2 billion last year to PHP 17 billion. With these results, we are confident that we will continue to take, I guess, more deliberate but calculated risks in expanding our credit appetite. And also the guardrails are we only put to test about 1%-2% of our projected loan portfolio. There.
There's another follow-up question, Jo. You mentioned the tests have helped you identify and figure out your risk appetite. What is your risk appetite for this market? How has it changed after your test? Is it higher or lower risk appetite?
I, Chinky Lucban, I think I kinda answered it already, with the first question. I think we're comfortable with an NPL of about 5%-6%, and for as long as it gives us incremental RAM, as long as it improves our market share. More importantly, as we said, BPI is aiming to be more financially inclusive. I think really it is better for those who borrow from nontraditional sources to move to borrowing with a formal banking institution.
Okay. Go ahead, TG.
I think what Go is driving at is really the emphasis that we're doing at the bank to experiment and try to grow our market share going forward. We're doing this all across the bank in every segment. To put more teeth into what Go is saying, we're very comfortable at the 5%-6% NPL level because those are revolvers who are paying us at a cap rate of 36% a year, right? So when we talk about credit card rates at 18%, that's for the whole portfolio. But the people who are borrowing on cards are paying 36%. So the risk reward at the 5% NPL is actually quite good. Now, there is no specific characteristic because we look at over 200 factors, and that's why we use scoring.
The CRISPR scores gave us a cutoff level that says we should move it up higher because we were not comfortable with the kind of results we were getting in the first pass. This goes to show that the bank is very focused on trying to grow our presence all across in every segment, not only the cards business, but if you will recall what Eric put out, one of our strongest loan growth was in what we call our SME business in the business bank, where our business grew at over 70% over the last year. That's really driven by tapping new customers and also by bringing in a new test scoring methodology to find new clients.
You'll see this repeated all across the bank, working with new suppliers, courtesy of Robinsons Bank under Johnsy's remit, under the consumer bank, where we have a MyBahay plan. We're trying to be more financially inclusive. MyKotse, tapping new markets for car loans, new to bank deposits, by the digital channels, and even at the very high segment like wealth, where we have programs not just tapping who our traditional clients were, where the old families were actually going out now with new programs because we're focusing on experiences rather than investments and looking for clients who are traditionally not BPI clients and bringing them onto the wealth platform. That's really the focus of the bank to try to get to our 50 million customers. We're at 12.5.
We have a long way to go. You know, certainly, when we get to a big number, this will certainly have changed the bank significantly. I don't know if any of my colleagues want to add more what they're doing to try to add more customers.
Okay. Thanks, TG. Joanna has a follow-up question. What's the NPL cover of your cards book? That's about-
1.64.
Yeah.
In fact, I think we have too much cover.
There's a question here on deposit competition. Ginbee, I think this is yours. Can you briefly comment on how the deposit competition has been tracking versus your expectations, and if we should assume that NIMS can be maintained at the current levels for full year 2024?
I think it's important to view competition more broadly on deposits, because when you think about deposits, it's very narrow and it's specific to a product. From a customer standpoint, it really is about their funds. Therefore, you need to do a segmented approach when it comes to total funds view. In the affluent, which is more price sensitive, our competitors there would really be those who are offering higher rates, such as the usual traditional banks. In some cases, when there is a need for liquidity, the second-tier banks are actually pricing much more aggressively than the traditional banks.
If you look at the core deposits business, you look at CASA, there is still, it's still the traditional banks that lord it over, and primarily because of operating funds that are kept with banks that are really offering very good relationships and very good systems that enable transfer of funds, that enable payments much more reliably. The traditional banks continue to lord it over in terms of our core deposits. When you think about the core mass market segment, competition there are actually going fintech, because they want ease, they want simplicity, they want speed. Therefore those are the markets that we're looking at. We look at Maya, we look at GCash, we look at the smaller players that are more digital.
There's no one size fits all when it comes to competition and deposits. For us in BPI, that's why we're going phygital because we are much more segmented in our view because we are customer-focused, and because we understand that as you go through your life stages and you become more affluent, advisory still becomes more important. That's why we continue to invest in our people in the branches and in our wealth management, with the best team, we continue to improve our investment advisory.
Thanks, Ginbee.
Maybe I can just speak to the.
Yeah, go ahead.
To the NIM expectations. I think largely we're expecting NIMS to remain at or about roughly around the current level that we're seeing right now even with rate reductions kind of in our view for the rest of the year. We think NIMs will remain fairly stable to where they are.
Okay. Thank you, Eric.
Maybe I'll add to that because Eric and I had a very long discussion on NIMS and to help all the analysts out there figure out why we think NIMS will remain where they are, even with rates being cut possibly maybe 2 times this year. The fact is that maybe 40% of our corporate loans reprice in the next 3 months and then 50% of our corporate loans reprice within the next 12 months. Corporate loans are only 75% of our total loan book, and our total loan book is only PHP 2 billion out of our total assets of about PHP 2.5 billion.
Trillion.
Trillion. Sorry. My belief is that as the BSP cuts rates, the deposit rates will react faster because we have 35% of our deposits in time deposits, which react one for one with the cut in BSP rates. Therefore, you'll possibly see actually a, in the very short term, maybe the next month or so after a cut, you'll actually see NIMS expand as the deposit rates fall faster than the fall in loan rates. We've also been very deliberate about our funding strategy. Our markets team, led by Dino Gasmen, have been very deliberate about watching the demand and the pricing of deposits. We're also launching a bond.
Bonds actually are cheaper by about 78 basis points versus the equivalent deposit in terms of same tenor only because we pay less reserves and there's no PDIC on a bond. That's why you'll see many of the banks go into the bond markets with the rates higher because of that 70-80 basis point savings in effective cost.
Thanks, TG. Our next question comes from Melissa Kwong of Goldman Sachs. On this new scoring for credit cards and personal loans, would you be expanding this test to other segments like mortgages and auto? Ginbee.
What? Yeah. We do have an initiative that we have been working on for quite some time, maybe a year, that TG also has sponsored, which is a one score, one customer score. Because a customer's ability to pay off, to pay loans, and to manage credit is really dependent on the capacity, the income capacity, the earning capacity. Of course, the values of, and the character of the person. You know about the four Cs. Therefore, it is not dependent on the product or alone. That's why Jojo and I are working on the one score, which is a single customer score. A BPI customer will have one credit score which can be applied to either the credit card, the personal loans, the auto loans, the housing loans, and even the business loans.
Jojo Ocampo and I... Jojo Ocampo's also part of the team in the business banking. The difference in the execution for each of the products will really be in terms of the requirements and also the cut-off scores, because the cut-off scores will depend on the risk profile of each customer. That's something to look forward to.
Okay. Thanks, Ginbee. The next question is from Selvie Jusman of Morgan Stanley. Do you have visibility on the new digital customer target? Are they in Manila or outside of Manila?
Sorry, just got that from Fitz. I think largely our new digital customers are coming from the core mass segment. I think that's really where it's gonna come from because that's the broadest base of customers.
It's not geography.
Geography
Specific. Although we do see the challenges as we go further out of non-urban cities because internet connection remains to be a challenge. That's why we're investing in upgrading the branch capacity for Wi-Fi, because we want more and more of our customers in the outskirts to be able to go digital and online.
Thanks, Ginbee. What's the breakdown of your cards business in terms of transactors, revolvers, and installment, and how does this compare to a year ago? Would you have details, Go?
Yes, I would have details. Hang on. Just a moment. Basically, it's 50% installment, 50% retail. Of the retail, about 25% transactors and 25% revolving. The revolving portion has basically increased by about 2 percentage points from last year. It's still primarily an installment portfolio, which is still consistently at 49%-50%.
Okay. Thanks, Go. Another follow-up question. May we also check your NPL cover for institutional and mortgage segments? What's driving the growth of your mortgage book? We noticed that rates have eased.
You wanna take the mortgage book?
Yeah. What's driving the growth in the mortgage books is really our quite a number of things. TG earlier alluded to our market expansion strategies, which would be introduction of relevant products that attract the lower segment of the market to enable affordability. That's the MyBahay. More aside from the MyBahay, we also have new product programs that improve the affordability, such as all-in financing or low down payment, which is really geared towards our existing depositors who already have deposit accounts with us. Our pre-qualified and lending programs remain to be a very strong source of mortgage. Of course, our strong partnership with the Ayala Group and Robinsons Land.
ALI and RLC are, of course, important synergy partners for us, and we've been ramping up joint initiatives. In fact, we've also increased our market coverages of Ayala Land and Robinsons Land. We also have been increasing coverages with our other top real estate developers such as DMCI, OCLP or Ortigas Land, and Rockwell Land. These are very good names. Even the strong regional real estate developers such as Cebu Landmasters, which is really big in VisMin. We have been improving and deepening our relationship with them. It's really making sure that the linkages are there and making sure that we're able to address their needs, be it access to our own depositor base through pre-qualified programs or through special pricing partnerships. That's.
Those are key drivers for us. We've also expanded our brokerage network with REBAP and RE/MAX, which is also a critical source for new accounts. Really what's driving our mortgage in terms of channel this year is our branch network. Our branch network has increased our releases much faster than our external network, and that really speaks of the strong channel relationships and relationship building of our branches.
Eric, on the cover.
Yeah, I can take the question on the NPL cover. For the institutional book, it is 1.4%.
Four times.
1.4 times. On the housing book it is 26%. Of course the housing book is fully collateralized, right? In fact, over-collateralized, mostly. Those are the NPL covers there.
Okay.
I think to add to what Ginbee was saying, you know, one of the things that we've always known was coming was a turn in the interest rate cycle. We obviously knew that interest rates would eventually be cut, and as our economist, Jun Neri is forecasting, will be cut sooner rather than later. We have prepared for this. We're hoping that the real estate market rebounds, and therefore we have built up the team to focus and we've built up the partnership and relationships, obviously with Ayala Land, but also now with Robinsons Land and then the other developers. Juan C. Syquia also has been working very hard on the institutional side to try to build up that loan book because that is the biggest part of our loan book.
Maybe I'll ask you to say a couple of words of some of the things we're doing both for the institutional side and also on the ecosystem side, the suppliers that we're doing.
Sure. Good afternoon, everyone. On the prospects of loan growth, now, 'cause as, I... The question's more on coverage. I think we're more than sufficiently covered for potential NPL formation. The formation that we're seeing is really very marginal as far as size is concerned to our total book and very manageable. On the loan growth prospects that we're looking at, our pipeline remains very robust. The reason for some tempered, I guess, drawdowns on the facilities that we have is mainly due to the outlook on interest rates. What's happened is for big ticket projects, the projects are still being pursued by many of the proponents.
It's just waiting for the interest rate cycle. That goes as well for the middle market segment. As we talk about it at length, let's say in our ALCO, you guys talk about it in your analyst meetings every morning, it sounds very complex, right? When you talk about interest rates. The client conversations we have are quite simple. If they have extra cash and they need to balance that versus their working capital requirements, do they use their cash or do they continue to borrow? The answers have been pretty straightforward, extra for them. The extra cash, because the general sentiment is rates will go down. Those in a healthy situation would postpone borrowing at this point.
For those with working capital requirements, it's delaying. They also delay the timeline in context and extending their working capital within the form of cash or inventory. That brings me to the point which TG wants me to refer to talk about, even very briefly. It's the supply chain initiatives that we're doing in our transaction banking area. It's not necessarily only TG with the Gokongwei Group of companies. Generally we're looking to really build the supply chain finance business that we have. When Eric talked about our transaction banking fee levels earlier, a big chunk remains in the trade space while cash management is still good.
Cash management, we know going forward, as Ginbee Go talked about the payment space in the retail area, we too are seeing remuneration for doing payments based on CASA buildup or deposit buildup with us, now, versus paying fees. You're seeing that across the wallet space as well. Where we're looking to add value to our clients is doing by giving easy-to-use a very easy to onboard experience as far as supply chain is concerned. What we're doing is working with a lot of our big clients, which we call our anchor clients, to try to build a supply chain process that helps them help their suppliers as well turn around their working capital more efficiently. Generally that's the picture.
If you want some numbers, just as an example, the throughput, for instance, of URC for 2023 in terms of cost of goods sold is about PHP 109 billion. That's what we can see, if you want to get that in full as a throughput that will pass through us if, in a perfect world, all through us. No, but definitely that's not the case now. That company, actually this is all you. If some of you cover URC as well, their accounts payable level is in the PHP 40 billion area more or less, on every quarter. That's more or less what kind of supply chain you'd ever see just from one company.
What we're doing, TG, is really working with our large clients to see how we can help them help their suppliers.
Okay. Thanks, Juan C. Syquia. We have another question from Earl Jamil. With prospects of at least one cut this year getting firmer and the yield curve moving as much, have corporate and middle market clients started to ask for rates that already price in more cuts by 2025? And if so, how has the bank responded to it?
This actually began. Where did the question come from, Chinky?
From Elle, Eryl Jaine Reyes.
From Elle. Okay. Yeah. We actually these discussions we were already having from last year. I'm looking at Jethro from our ALM team. We we've been discussing the prospect of a rate cut now for almost a year, no? We're approaching. Therefore your client, as I said earlier, complex discussion within our ALCO turns into very simple discussions with our clients. Is it good for me to borrow now? Will rates go down soon or later? What that translates to is for clients who want to pursue drawdowns early, they're drawing on floaters because they'll get the benefit of the downturn. For clients who can postpone borrowing, they have postponed borrowing and use of cash.
For some clients, they've actually used their extra cash just to ensure that they have liquidity. They've continued to borrow, but then they address the negative carry by placing the funds, let's say, in TDs or other marketable securities. So that's what we've seen, Chinky. I don't know if that addresses. We see this 'cause there is a question also mentioned middle market. I think generally it works across the whole market.
Okay. Thank you, John C. A question here for you, Eric. What is the comfortable leverage and CET1 level for the bank?
Yes. I think that's one question, right? I mean, the leverage. From a CET1 perspective, I think our comfort is driven by our outlook for the environment, right? I think right now we have a fairly positive outlook for the environment. I mean, obviously we do understand that there continue to be some risks, but overall, on balance, it's a fairly positive outlook for what is to come. From an internal threshold standpoint, our internal limit is 11.625%. We're not looking to hit that limit, but our view is that we are in a fairly favorable environment.
Thank you, Eric. Any questions from anyone here on the floor? Go ahead, Danielle.
Hello. Hi. Danielle from AB Capital. I just want to circle back on CRISPR. It sounds very interesting, but it's starting to appear like it may not just be an asset quality review exercise. I'm curious as to whether there's a strategy in or around risk-based or dynamic pricing as to what we're already seeing with green loans. Within that strategy, I'm just curious as to whether there could be potential collaborations given that they've been doing it for quite some time now. That's it.
We actually have a collaboration with GCash. In fact, 40% of the acquisitions that we're getting on credit cards is actually coming from the digital channels, and GCash is one of them. We collaborate with them to the extent that we give them a profile of who we like, and then they send marketing messages to these types of clients. But that's as far as the collaboration will go. I didn't get your first question. Again, you're free.
Risk-based pricing.
Yes, risk-based pricing. Yes. As we move to a new system on credit cards, we may be able to do risk-based pricing then. Today, as we speak, our credit card system cannot accommodate risk-based pricing. We are migrating to a new system, which we hope to implement for new products at the start, by the end of the year and to migrate the portfolio, by middle of next year.
We do use the score, right? For approvals.
We use the score for approvals.
For credit limits.
as well as the assignment of credit limits.
Yeah. The problem with doing risk-based pricing on rate is you have a cap, right? Therefore, we cannot price appropriately for the poorer credits as we want. The cap effectively says everyone's gotta get the same rate.
That's on cards.
on cards.
On personal loans, we're able to do risk-based pricing.
Can I just add some thoughts on the risk-based pricing? Because I think that's something that many banks have been thinking about given the standards elsewhere outside of the Philippines, 'cause that's very much in place in the more sophisticated markets. One of the key factors there is also the existence of a visible scoring credit score that's available. Like, there's Experian score, right? There is TransUnion score. Every individual in that country would know their credit score, and they would check that. That's still not the case in the Philippines. Because I sit in the TransUnion board, and that's something that we would, of course, want to be able to put in place here in a more credit-aware country, right?
That requires education, and that's one of the things that we need to still do before we can get to a sophistication just like the United States or Singapore. More than the system, more than our capability, it's the education and a synchronized industry effort to do that. Just be done or how? What is this like? In fact, the national ID is still not prevalent. We'll leave it to the regulators and the industry to be able to do that. There is the desire, and TG sits in the BAP as well. There's the desire, and BSP has that desire. The ease of doing business is a big effort on that. That's why there is that scoring. There's still much to be done.
We can't really say, but at least the efforts are there. Thank you.
Thank you, Ginbee. Anyone else? I don't have any questions in queue from our virtual audience, but here on the floor, if there are any more questions. Going. Going. Okay. Thank you everyone for your questions. Before we end the call, may we have TG for some final thoughts.
Thanks, Chinky. Nothing really to add. I think what you've seen today is the way the bank performed in the first six months of the year. I think looking forward, we're expecting a couple of rate cuts from the BSP. We feel comfortable that we will manage through that cycle. We're positioned for that. We've got strong loan growth. We've got a loan book that's slowly moving towards the 30% level that we've set out to be for non-institutional loans. We're very comfortable with our credit and our credit costs. We're very optimistic about our non-interest income going forward. Thanks to all of you for joining us today at this earnings call, and we look forward to seeing you again in another 90 days.
Thank you, TG. Thank you, Eric, and to the BPI senior leadership team here in front. Ladies and gentlemen, this concludes today's earnings call. I thank you for your participation. To those joining us online, you may now disconnect. To those here on site, please join us for cocktails. Thank you.