BDO’s 1H 2026 Profits Barely Grew. Its Spending on Workers, Security, Janitorial and Messenger Services—and Taxes—Did.

 

The Philippine banking giant’s core interest earnings increased in the first half of 2026. Much of that additional value, however, flowed to employees, service providers and the government rather than landing on the bottom line.

At first glance, BDO Unibank’s first-half results appeared uneventful.

The country’s largest bank reported ₱40.85 billion in net profit for the six months ended June 30, barely changed from ₱40.76 billion a year earlier. Earnings attributable to shareholders of the parent bank increased just 0.3 percent, while basic earnings per share edged up by one cent, to ₱7.56. 

But beneath that nearly static bottom line, a more dynamic redistribution of economic value was taking place.

BDO’s net interest income—the difference between what it earned from loans and investments and what it paid to depositors and other creditors—rose 10.6 percent, to ₱108.51 billion. Even after the bank set aside substantially more money for possible credit losses, net interest income after provisions increased 5.3 percent, to ₱95.75 billion from ₱90.89 billion. 

Ordinarily, that improvement might have produced visibly higher profits. Instead, much of it was absorbed by the costs of running one of the Philippines’ largest financial institutions: salaries and benefits, security and janitorial services, taxes, licenses, branches, technology and other operational necessities.

To shareholders focused narrowly on earnings growth, the outcome may look disappointing. To workers, contractors and the public sector, it can look rather different.

Where the additional income went

BDO spent ₱88.05 billion on operating expenses during the first half, up 6.9 percent from ₱82.36 billion a year earlier. Compensation and benefits increased 11.2 percent, to ₱34.44 billion. Payments for security, clerical, messengerial and janitorial services rose 18.6 percent, to ₱3.39 billion, while taxes and licenses increased 11.1 percent, to ₱9.84 billion. 

Together, those three categories increased by nearly ₱5 billion.

In conventional financial analysis, they are costs: amounts deducted before arriving at profit. But in the broader economy, one company’s cost is often another household’s income, another small business’s revenue, or another government agency’s collection.

Compensation supports BDO’s employees, from branch and operations personnel to managers and specialists. Payments for security, clerical, messenger and janitorial services sustain labor-intensive businesses whose workers are often among the more modestly paid participants in the formal economy. Taxes and license fees, meanwhile, become public revenue, potentially helping finance government services and infrastructure.

The bank’s financial statements do not disclose how the rise in compensation was divided between senior executives and rank-and-file employees. Nor do they show how much of the increase in outsourced-service payments ultimately reached guards, janitors, clerks and messengers rather than going toward agency fees, equipment, statutory benefits or contractor profits.

Still, the movement of money is economically meaningful. It suggests that BDO’s growing banking income was not merely retained by shareholders. Part of the additional value moved outward—to employees, service companies and the state.

Growth without corresponding profit

The tension between strong operating growth and flat profit was visible throughout the income statement.

Interest income increased 12.4 percent, to ₱159.61 billion, helped by a larger loan book and investment portfolio. Interest expense rose faster, climbing 16.5 percent to ₱51.10 billion, as the bank relied more heavily on time deposits and other relatively expensive sources of funding. Nevertheless, net interest income still grew by more than ₱10 billion. 

The bank then recorded ₱12.77 billion in impairment losses, up from ₱7.25 billion a year earlier. That 76 percent increase absorbed more than half of the additional net interest income before provisions. Even so, BDO emerged with nearly ₱4.86 billion more in net interest income after provisions than it had generated in the comparable period of 2025. 

That remaining expansion was largely consumed by operating expenses.

Compensation and benefits increased by approximately ₱3.47 billion. Taxes and licenses rose by nearly ₱1 billion. Security, clerical, messenger and janitorial expenses increased by more than ₱500 million. Occupancy, insurance and other costs also rose. 

The result was a modest 2.4 percent increase in profit before tax and virtually no change in net profit.

It would be easy to describe that performance simply as margin pressure. Yet such a conclusion would overlook where the money went—and what it may have accomplished after leaving the bank’s accounts.

A stakeholder view of profitability

For much of modern corporate history, the shareholder has occupied a privileged place in evaluating business performance. Under that model, earnings retained by the company or distributed as dividends represent value created, while wages, taxes and payments to contractors appear primarily as reductions in that value.

A stakeholder-capitalism perspective changes the frame.

It asks not only how much profit a company produced, but also how the gains from its operations were divided among shareholders, employees, customers, suppliers and the government. Under that interpretation, a higher wage bill is not automatically evidence of waste, just as a lower wage bill is not automatically evidence of efficiency.

The quality of the spending matters.

If higher compensation improves employee retention, customer service and household security, it may benefit the bank and its workers simultaneously. If expenditures on guards, cleaners and support personnel provide stable jobs and safer branches, they contribute to the infrastructure that allows a large retail and commercial bank to function. If taxes are effectively deployed, they can support the physical and institutional systems upon which private enterprise depends.

This does not mean investors should ignore rising costs. A bank that allows expenses to grow indefinitely faster than revenue will eventually weaken its ability to extend credit, invest in technology, build capital and pay dividends. Nor should every increase in compensation or contractor payments be presumed socially beneficial without knowing who ultimately receives the money.

But BDO’s results do not show uncontrolled cost growth. Ordinary operating expenses rose 6.9 percent, slower than the 10.6 percent increase in net interest income. On a pre-provision basis, that suggests the bank’s underlying operating efficiency did not deteriorate.

The sharper financial concern was the increase in credit provisions, not the wage and service bill alone.

A profitable institution sharing a larger pie

BDO remained highly profitable. Its balance sheet expanded to ₱5.90 trillion, net loans and receivables reached ₱3.95 trillion, and deposits increased to ₱4.57 trillion at the end of June. The bank also paid ₱12.14 billion in cash dividends during the six-month period. 

Shareholders, in other words, were not excluded from the distribution of value. They received dividends and retained an interest in a larger banking franchise. But they were not the only beneficiaries of its growth.

That distinction matters in an economy where large financial institutions occupy an unusually broad social position. Banks do not merely move money between borrowers and depositors. They employ thousands of people, purchase services from contractors, collect and pay taxes, maintain physical networks and influence where capital flows.

BDO’s flat net income therefore tells only part of the story.

The bank generated more income from its core financial operations, even after recognizing substantially higher provisions. But instead of allowing all that improvement to fall through to profit, a considerable portion was absorbed by operating expenditures—some representing incomes for employees, revenues for labor-intensive service providers, and funds for the government.

For investors, that distribution meant slower earnings growth. For the wider economy, it may have meant something more constructive: a profitable institution expanding the pool of value it created, while sharing more of that pool beyond its shareholders.

That is not philanthropy. It is still business. But viewed through an inclusive-growth lens, it is a reminder that a company’s contribution cannot always be read from the final line of its income statement.

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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.