{"id":325550,"date":"2023-11-02T13:24:54","date_gmt":"2023-11-02T05:24:54","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325550"},"modified":"2023-11-02T13:24:57","modified_gmt":"2023-11-02T05:24:57","slug":"stock-in-focus-bank-of-the-philippine-islands-bpi-3-nov-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bank-of-the-philippine-islands-bpi-3-nov-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Bank of the Philippine Islands (BPI) – 3 Nov 2023 by AP 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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>3 Nov 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 120.72<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We have a Target Price of P120.72\/share for BPI, underpinned by Price-to-Book (P\/B) ratio of 1.53x and 2024 Book Valuie per Share (BVPS) of P78.8\/share. We subsequently recommend a BUY on the bank due to its solid upside of 20.7%. Our forecasts are highlighted by likely delays in rate cuts, along with heavy digitalization efforts on the part of BPI. The strategic merger with Robinsons Bank (RBC), which management hopes to complete by January 2024, will also further supplement the bank\u2019s push towards a more modern direction.<\/p>\n\n\n\n

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

Prospects of rate cuts in early 2024 are fading fast<\/h3>\n\n\n\n

BSP Governor Remolona has emphasized that rates will need to stay elevated in the coming months given the resurgence in headline inflation. As such, the prolonged elevation in rate levels may keep the bank\u2019s loan yields and NIMs above their usual levels well into 2024.<\/p>\n\n\n\n

Digitalization and agency banking to stimulate growth prospects<\/h3>\n\n\n\n

As BPI rides the digital and agency banking wave, we expect loan growth in the next 2 years post-2023 to sustain an exceptional pace ranging in the mid to high teens. The 20% stake of RBC in GoTyme digital bank will also serve as further icing on the cake.<\/p>\n\n\n\n

Medium term cost headwinds<\/h3>\n\n\n\n

We note however, that rapid customer acquisition and continued tech investment are expected to drive up expenses, thereby making BPI\u2019s goal of achieving 45% cost-to-
income by 2026 a difficult feat. Additional expenses from the RBC merger in 2024 could also further compound this, as BPI will have to deal with the costs of absorbing added branches and employees, along with other systems-related integrations.<\/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>