Summary of Broker’s Recommendation
|Company Name||BDO Unibank Inc.|
|Opinion Issued on||13 Mar 2023|
|1-Year Target Price||PHP 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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