{"id":323269,"date":"2023-05-22T23:16:45","date_gmt":"2023-05-22T15:16:45","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323269"},"modified":"2023-05-22T23:16:46","modified_gmt":"2023-05-22T15:16:46","slug":"stock-in-focus-bank-of-the-philippine-islands-bpi-23-may-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bank-of-the-philippine-islands-bpi-23-may-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Bank of the Philippine Islands (BPI) – 23 May 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>BPI<\/td><\/tr>
Company Name<\/strong><\/td>Bank of the Philippine Islands<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>23 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 124.30<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We reiterate our BUY rating on BPI and our target price (TP) of Php124.30 per share.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Merger with RBC is a big plus<\/strong><\/p>\n\n\n\n

Upon completion of the merger with Robinsons Bank Corporation (RBC), BPI will be able to collaborate across the ecosystem and network of the Gokongwei Group to reach more customers, especially the Filipino-Chinese market. By then, BPI may be able to bring its consumer loans closer to its goal of 30% of total loan book from 20% at present.<\/p>\n\n\n\n

Consolidation of branch presence<\/strong><\/p>\n\n\n\n

BPI started its branch network optimization by co-locating and has so far reduced the number of its branches from 869 as of end-2022 to 752. It plans to bring this down further to about 700 by the end of this year as it rationalizes duplicate locations with RBC. The longer term objective of BPI is to grow its client base by five times to over 50 million in 5 years.<\/p>\n\n\n\n

Minimal potential EPS dilution in 2024<\/strong><\/p>\n\n\n\n

The merger may be finalized on January 1, 2024 as BPI originally expected and the potential FY24 EPS dilution is 3.7% in our estimates based on: (1) our conservative assumption that RBC will only be able to make a net income of Php1.4 billion in 2024, same as the level in 2022, and (2) 319 million primary common shares will be issued to RBC shareholders for a 6% stake in the expanded common shares of BPI as set forth in the agreement.<\/p>\n\n\n\n

1Q 2023 net income up 52% y\/y<\/strong><\/p>\n\n\n\n

To recap, BPI\u2019s 1Q23 core net income reached Php12.1bn, 52% higher year-on-year (y\/y). Net interest income (NII) rose by 27% to Php24.2bn as gross loans and deposits grew by 13% and 14%, respectively. Non-interest income rose by 19% to Php7.6bn, fuelled by higher credit card billings and charges, trading gains and fees from investment banking projects. Meanwhile, operating expenses increased by 20% to Php15.1bn mainly due to higher transaction-related fees and spending on digital initiatives, manpower and marketing.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>