{"id":327379,"date":"2024-04-05T02:00:38","date_gmt":"2024-04-04T18:00:38","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327379"},"modified":"2024-04-05T02:00:39","modified_gmt":"2024-04-04T18:00:39","slug":"stock-in-focus-bdo-unibank-inc-bdo-5-apr-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bdo-unibank-inc-bdo-5-apr-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: BDO Unibank, Inc. (BDO) – 5 Apr 2024 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>5 Apr 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 175.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We slightly increased our target price (TP) for BDO Unibank, Inc. (BDO) to Php175.00 as we rolled forward our estimates. We think that BDO will post improved loan growth (+10%) for 2024 and 2025 with the recovering economy and the expected interest rate cuts after 1H 2024.<\/p>\n\n\n\n

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

Outlook<\/h3>\n\n\n\n

We expect BDO\u2019s core net income for 2024\/2025 to increase by 5.0%\/4.3%. Net interest income may grow by 8.0%\/8.6% supported by a 10% jump in loans from the expected continued recovery in the economy. Furthermore, we see sustained growth in non-interest income for BDO at 9.5%\/10% but forecast operating expenses to grow by 12.0%\/13.0% with BDO\u2019s investments in more manpower and technology.

BDO\u2019s net interest margins (NIMs), finally ended its 7-quarter streak of expansion, as it fell by 5bps q\/q. Notably, it still has one of the highest NIMs among the top three banks, edging BPI and MBT at 4.14% and 4.03%, respectively.<\/p>\n\n\n\n

BDO\u2019s\u2019 asset quality stayed strong with provisions being flat y\/y, resultingin an improved NPL ratio at 1.85% and NPL coverage ratio of 185%. The bank is highly capitalized, with a capital adequacy ratio (CAR) of 14.9% and a CET1 of 13.8%. In addition, BDO is one of the most profitable banks with an ROE of 15.2%.<\/p>\n\n\n\n

Earnings recap<\/h3>\n\n\n\n

BDO recorded a net income of Php73.4 billion, 29% higher year-on-year (y\/y) and in-line with consensus estimates and slightly above our estimates (102.6%) due to better-than-expected loan growth. Net interest income grew 25% y\/y to Php186.4 billion from a 9% jump in gross loans; thus, resulting in net interest margin (NIM) expanded by 51bps to 4.65%. <\/p>\n\n\n\n

Non-interest income climbed 17% to Php84.0 billion with fee income growing 11% on increased volume transactions and trading & FX gains advancing by 18%. Operating expenses increased 22% to Php156.8 billion along with the jump in volumes, branch expansion, and IT investments. ROE grew by 2.2ppts to 15.2%.<\/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>