{"id":327299,"date":"2024-03-27T01:42:59","date_gmt":"2024-03-26T17:42:59","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327299"},"modified":"2024-03-27T01:43:01","modified_gmt":"2024-03-26T17:43:01","slug":"stock-in-focus-bdo-unibank-inc-bdo-27-march-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bdo-unibank-inc-bdo-27-march-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: BDO Unibank, Inc. (BDO) – 27 March 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>BDO<\/td><\/tr>
Company Name<\/strong><\/td>BDO Unibank Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>26 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 169.70<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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BDO’s management has indicated that that they expect loan growth in the high single digit to low double digit-range this year. With the way things are going however, we think that the upper range of the forecast is a very realistic target for the bank. We therefore continue to recommend a BUY on BDO, with a Target Price of P169.70.<\/p>\n\n\n\n

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

New year brings fresh growth<\/h3>\n\n\n\n

The banking industry kicked off 2024 with some good news as systemwide loans (net of reverse repurchases) grew by 10.1% year-on-year (YoY), the fastest pace of expansion since July of last year. Unlike previous months, contributions this time around came from all areas as both loans for economic activities and consumer loans chipped in growth of 8.3% and 26.3%, marks which were higher than what we have been accustomed to lately. <\/p>\n\n\n\n

In our view, this marks the beginning of a turnaround in the performance of banks\u2019 loan books as momentum will not only come from the consumer space, but will now also see additional fuel coming from the business lending side. Recall that corporate loans were the main drag in loan performance these past quarters. With business lending accounting for around 70% of banks\u2019 total loan portfolios, this should therefore be a big positive for the sector as a whole.<\/p>\n\n\n\n

Volumes are the name of the game<\/h3>\n\n\n\n

With net interest margins set to slowly normalize in the latter half of this year given expected rate cuts by the BSP, we reiterate that earnings performance of banks will now be driven by their capacity to grow their loan books. In this regard, we therefore think that market share and the ability to grow it will be key to driving the bottomline. <\/p>\n\n\n\n

When looking at the share of big banks to the total loan market, we can see that BDO\u2019s grip is exceptionally strong, having managed to corner 1\u20444 of the entire pie. Given the Sy-led lender\u2019s approach to expansion which relies on opening as many branches as possible, we think that this old school strategy actually continues to bear merit even as digital lending gains traction. <\/p>\n\n\n\n

This is because of the fact that under the SM empire, BDO branches would be able to tap into the conglomerate\u2019s vast network of malls, retail establishments, residential properties, customers and employees. As mall foot traffic continues to strengthen, with SM malls now slightly above pre-pandemic levels, this presents an even greater tailwind for BDO and its strategy.<\/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>