Manila's BPI says revenues under pressure

MANILA, April 3 (Reuters) - Bank of the Philippine Islands (BPI.PS), the country's third-largest lender by assets, said on Thursday revenues this year would be hit by financial market turmoil and more difficult local market conditions.

"The first quarter has been one of the most turbulent quarters both from an economic point of view and investments point of view," said bank president Aurelio Montinola.

"Business volumes are good (but) revenues are challenged, so that's why we have to keep our operating expenses flat."

Despite the more difficult conditions, Montinola said BPI's loan portfolio was up 12-13 percent in the first quarter from a year ago, against a central bank forecast of 10 percent growth this year.

Montinola said BPI, owned by Singapore's DBS Group (DBSM.SI) and the Philippines' Ayala Corp (AC.PS), was also ready for another acquisition after it raised its authorised capital by 69 percent to 49 billion pesos ($1.2 billion).

"BPI is known for acquiring and our last acquisition was in 2005," Montinola told reporters. "Let's just say, given the health of BPI today, we are ready when an opportunity arises," he said, when asked about possible acquisitions.

The bank, the Philippines' most valuable lender with a market value of $3.6 billion, bought medium-sized Prudential Bank in 2005, five years after it bought rival Far East Bank & Trust Co.

BPI said the hike in its authorised capital was partly due to its declaration of a 20 percent stock dividend, its first in three years.

"The increase in authorised capital stock is the first we've done within the last 7 years," Montinola said. "Every now and then we increase our authorised capital stock significantly so we will be ready for the next 4 or 5 years."

Montinola said BPI was in talks with a foreign bank about selling some of its soured assets, mainly foreclosed real estate as well as non-performing loans.

BPI wants to sell 15 percent, or about 3 billion pesos, of its soured assets to free up more of its resources and raise its loan portfolio.

BPI is expected to post net income of 11.75 billion pesos this year, up 17.5 percent from 2007, Reuters Estimates show. Shares of BPI closed unchanged on Thursday as the main index .PSI slipped 0.44 percent.

($1= 41.61 pesos) (Reporting by Rosemarie Francisco, editing by Jacqueline Wong) ((rosemarie.francisco@reuters.com; Reuters Messaging: rosemarie.francisco.reuters.com@reuters.net; +63 2 841-8937))