MANILA–Philippine conglomerate SM Investments Corp.’s (SM.PH) 2014 net profit will exceed last year on real-estate sales and more stable earnings from banking unit BDO Unibank Inc. (BDO.PH), it said Wednesday.

SM Prime Holdings Inc. (SMPH.PH) should lift group earnings as new projects are launched while BDO Unibank should reach its profit guidance of 22.8 billion pesos ($524 million), SM Investments Chief Financial Officer Jose Sio said.

Consolidation of real estate under SM Prime allows the group to look at development projects in China like office and residential as well as hotels, Mr. Sio said. SM Prime operates five shopping malls in China and will open the 154,000-square-meter SM City Zibo in Shandong province later this year.

Diplomatic tensions between the Philippines and China over territories in the South China Sea don’t bother the group, he said. “People-to-people, business-to-business relationships remain good. This is all politics,” he said.

The interest-rate differential between foreign and domestic borrowing is still “not compelling” given foreign-exchange risk the group will be exposed to if it takes on additional foreign debt, he said. However, if spreads widen because of the recent upgrade of the Philippine credit rating by Standard and Poor’s then the group will consider foreign borrowing.

First-quarter net profit dropped 16% year over year to 6.24 billion pesos because earnings in the year-earlier period were helped by significant trading gains at BDO Unibank.

Write to Cris Larano at [email protected]; @CrisLaranoWSJ