{"id":323829,"date":"2023-06-26T22:29:56","date_gmt":"2023-06-26T14:29:56","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323829"},"modified":"2023-06-26T22:29:58","modified_gmt":"2023-06-26T14:29:58","slug":"stock-in-focus-unionbank-of-the-philippines-ubp-26-june-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-unionbank-of-the-philippines-ubp-26-june-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Unionbank of the Philippines (UBP) – 26 June 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>UBP<\/td><\/tr>
Company Name<\/strong><\/td>Unionbank of the Philippines<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>26 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 80.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set our target price for UBP at Php80.00 per share. This is based on a Price-to-Book ratio (PBR) of 1.02x, halfway between the bank\u2019s current 12-month forward PBR of 1.01x and 2020-2021 PBR of 1.03x. Our Target Price offers a potential share price upside of 5.7% and a total potential return of 8.3% inclusive of our dividend yield forecast, hence, the Hold rating.<\/p>\n\n\n\n

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

1Q 2023 net income climbs 30% to Php3.3bn<\/strong><\/p>\n\n\n\n

UBP\u2019s 1st quarter (1Q) 2023 net income rose by 30% year-on-year (y\/y) to Php3.3 billion. Net interest income (NII) increased by 43% to Php11.5 billion as gross loans and deposits grew by 43% and 22% y\/y respectively. Net interest margin (NIM) expanded by 54bps y\/y and 20bps q\/q to 5.2%. <\/p>\n\n\n\n

Non-interest income more than doubled (113%) to Php4.6 billion mostly from higher fee income because of increased digital transactions. Operating expenses jumped by 67% to Php10.1 billion from the integration of Citi. In terms of asset quality, gross NPL ratio averaged around 4.4%-4.8%, while NPL cover ranged from 60-70%. NIMs continue to grow UBP continued to widen its NIM, as it grew by 30bps q\/q in 1Q23. This was attributed to the increase in higher-yielding earnings assets.<\/p>\n\n\n\n

Citi acquisition paying off<\/strong><\/p>\n\n\n\n

Last August 2022, UBP acquired Citi\u2019s retail business and is starting to reap the benefits. In 1Q 2023, UBP\u2019s total gross loans rose by 43% to Php490 billion, driven by the 150% jump in consumer loans from additional credit card and personal loans.<\/p>\n\n\n\n

Forecasts<\/strong><\/p>\n\n\n\n

We forecast 2023 net interest income to climb by 25% y\/y with our expectation of a 15% loan and deposit growth. Net interest margins are seen to increase by 16bps this year supported by loan growth. We forecast non-interest income to jump by 25% primarily from higher fee income. Operating expenses are projected to climb by 28% from digital expansion.<\/p>\n\n\n\n

Lastly, we expect core net income to grow by 26% this year. Note, however, that EPS growth would be much slower at 2.6%, in our estimates, due to the impact of the stock rights offering (SRO) in January which increased UBP\u2019s outstanding shares by nearly 10%.<\/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>