Stock in Focus: BDO Unibank, Inc. (BDO) – 13 Mar 2023 by RCBC Securities

Stock report by: RCBC Securities
Category: FREE Reports

Summary of Broker’s Recommendation

Stock CodeBDO
Company NameBDO Unibank Inc.
BrokerRCBC Securities
Opinion Issued on13 Mar 2023
1-Year Target PricePHP 139.20

BDO trades at a 2023 price-to-book ratio (PBR) of 1.2x, lower than its 2017-2019 average PBR of 1.8x. We have a Buy recommendation on BDO with a Target Price of Php 139.20/share.

Analysis and Opinion

BDO benefits from the higher interest rate environment as net interest margins (NIMs) expand. As the biggest bank, it stands to benefit from the economic reopening by way of loan and deposit growth. Consequently, its 2022 net interest margin widened to 4.1% from 4.0% in 2021.

Asset quality also improved last year as non-performing loans (NPL) ratio declined to 1.9% from 2.8% a year ago. NPL coverage improved to 167%.

We expect BDO’s 2023/2024 net interest income to increase 19%/11% respectively on the back of NIM expansion and sustained loan and deposit growth. Meanwhile, we forecast 2023 and 2024 net income to rise by 18% and 11%, respectively.

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RCBC Securities

RCBC Securities

RCBC Securities (RSEC), established in August 1973, is the stockbrokerage unit of Rizal Commercial Banking Corp. (RCBC), one of the Philippines’ largest commercial banks and a member of the Yuchengco Group of Companies. Learn more about them here.
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