{"id":326680,"date":"2024-02-08T01:20:33","date_gmt":"2024-02-07T17:20:33","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326680"},"modified":"2024-02-08T01:20:35","modified_gmt":"2024-02-07T17:20:35","slug":"stock-in-focus-bank-of-the-philippine-islands-bpi-8-feb-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bank-of-the-philippine-islands-bpi-8-feb-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Bank of the Philippine Islands (BPI) – 8 Feb 2024 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>8 Feb 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 129.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set our target price (TP) for Bank of the Philippine Islands (BPI) at Php129.00 as we account for 2025 in our valuation. Our TP offers an upside of 13.0%. We believe that the bank can sustain its double-digit loan growth this year and in 2025 due to the improving economy while maintaining its net interest margin expansion (NIM) at least for this year.<\/p>\n\n\n\n

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

2023 Results<\/h3>\n\n\n\n

BPI recorded a net income of Php51.7 billion, 31% higher year-on-year (y\/y). Excluding the one-off gain from the 2022 property sale, core net income would be 44% higher, beating consensus but in line with our estimates. Net interest income climbed 22.7% to Php104.4 billion with loan growth reaching 10.5% to Php1.9 trillion and NIM expanding by 50bps to 4.09%.<\/p>\n\n\n\n

Total deposits grew 9.5% to Php2.3 trillion, mainly from the jump in time deposits as CASA ratio was at 67.0%. Non-interest income inched 1.5% higher to Php34.0 billion, primarily attributed to record trading income gains at Php5.2 billion. Operating expenses soared 19% to Php69.1 billion due to higher manpower, technology, and marketing costs. Return on Equity (ROE) was at 15.35%, while CET1 and CAR were at 15.3% and 16.2%, respectively.<\/p>\n\n\n\n

2024\/2025 outlook<\/h3>\n\n\n\n

We estimate BPI\u2019s 2024\/2025 core net income to grow by 7%\/14% as we expect net interest income to continue to climb by 10%\/14% on the back of sustained double-digit loan growth and a drop in deposit rates. Non-interest income is forecasted to grow by 15% for both years as we expect an increase in its digital customers along with its investments in technology. We also expect FY24\/FY25 operating expenses to grow by 16%\/15% aligned with management\u2019s guidance.<\/p>\n\n\n\n

Note that BPI hinted that this would already include expenses for the integration with Robinsons Bank. Lastly, we expect provisions to grow by 25%\/10% because of the delayed impact of inflation and rate hikes. Nonetheless, we expect BPI to maintain its strong asset quality given that it has a more than ample NPL cover of over 150%, which is above its pre-pandemic level (2019) of 103%.<\/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>