{"id":324866,"date":"2023-09-14T01:56:56","date_gmt":"2023-09-13T17:56:56","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324866"},"modified":"2023-09-14T01:56:58","modified_gmt":"2023-09-13T17:56:58","slug":"stock-in-focus-unionbank-of-the-philippines-ubp-14-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-unionbank-of-the-philippines-ubp-14-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Unionbank of the Philippines (UBP) – 14 Sept 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>14 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 76.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We lowered our target price (TP) for UBP to Php76.00 from Php80.00 following its 1st half (1H) 2023 results, which were below our expectations on higher-than-expected provisions and operating expenses. We reduced our 2023\/2024 net income forecasts by 21%\/25% to Php12.5 billion\/Php14.4 billion. Our revised Price-to-Book Ratio (PBR)-based Target Price offers a potential total return of 9.8% inclusive of our dividend yield forecast of 2.8%. HOLD rating maintained.<\/p>\n\n\n\n

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

Earnings recap<\/strong><\/p>\n\n\n\n

UBP reported 1H 2023 net income of Php6.3 billion, 6% higher year-on-year (y\/y). Net interest income climbed by 41% to Php24.0 billion due to the 43% growth in loan portfolio and net interest margin (NIM) expansion by 60bps to Php5.2%. Fees and other income more than doubled to Php10.5 billion from card-related transactions, digital transactions, and the growing base of the bank\u2019s key subsidiaries. Operating expenses soared by 82% to Php21.8 billion on account of the one-time acquisition of Citi Consumer Business. Asset quality remains a concern as its NPL ratio has not improved at 5.0%. Capitalization was fair with CAR and CET1 at 16.2% and 14.5%,n respectively.<\/p>\n\n\n\n

Dominant loan growth from recent acquisition<\/strong><\/p>\n\n\n\n

UBP\u2019s loan growth has been on a roll, climbing by 6% quarter-on-quarter (q\/q) and 43% year-on-year (y\/y) to Php520 billion in 2Q 2023 as it benefitted from its recent acquisition. The consumer loan segment was the main driver of the increase, as it more than doubled y\/y to Php179 billion. Furthermore, the additional contribution of UnionDigital, which only launched last July 2022, boosted loans.<\/p>\n\n\n\n

Provisions drag<\/strong><\/p>\n\n\n\n

The bank\u2019s provisions tripled (+220%) y\/y to Php5.0 billion in 1H 2023. In the 2nd quarter (2Q) 2023, provisions grew by 33% q\/q to Php2.8 billion, indicating that higher rates and inflation have affected its customers. UBP\u2019s asset quality was bothered as its 2Q 2023 NPL ratio increased by 20bps to 5.0%.<\/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>