{"id":327447,"date":"2024-02-16T01:58:07","date_gmt":"2024-02-15T17:58:07","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327447"},"modified":"2024-04-11T00:22:17","modified_gmt":"2024-04-10T16:22:17","slug":"stock-in-focus-bank-of-the-philippine-islands-bpi-11-apr-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bank-of-the-philippine-islands-bpi-11-apr-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Bank of the Philippine Islands (BPI) – 11 Apr 2024 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>11 Apr 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 128.42<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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After updating our long-term Return on Equity (ROE) and growth assumptions, our revised Target Price came in at P128.42, 6.4% higher than its previous iteration. Given the bank\u2019s ample upside, attractive valuations, and loan growth propensity, we therefore recommend a BUY on BPI. <\/p>\n\n\n\n

Risks to our outlook would come in the form of i.) a sudden slowdown in business\u2019 expansionary activities, and ii.) faster than expected OPEX growth.<\/p>\n\n\n\n

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

Earnings match expectations<\/h3>\n\n\n\n

BPI\u2019s 2023 earnings of P57.1-Billion (+33.5%) were on par with our forecasts, accounting for 98.0% of our projections. The bottomline was mainly driven by 22.7% expansion in net interest income, loan growth of 10.2%, and a drop in provisioning (-56.4%). All in all, 2023 results translate to an ROE of 15.35% (+2.21ppts). <\/p>\n\n\n\n

Normalizing NIMs, but faster loan growth<\/h3>\n\n\n\n

Moving forward, we are factoring in dual expectations of a gradual tapering off in net interest margins (NIMs) alongside a pickup in lending volumes into our forecasts. Consequently, our net interest income estimates for FY24E \/ FY25E improved slightly by 2.1% \/ 1.8% to P117.9-Bn \/ P129.6-Billion.<\/p>\n\n\n\n

Non-interest income and costs climbing, credit costs normalizing<\/h3>\n\n\n\n

BPI\u2019s aggressive pursuit of new customers via its digital platforms is expected to result in i.) heavier transaction volumes and an increase in fee revenues, as well as ii.) higher OPEX growth which will be further aggravated by the Robinsons Bank integration. <\/p>\n\n\n\n

Given this outlook, we raised our non-interest income and cost-to-income projections for 2024 \/ 2025 to P41.9-Billion \/ P50.1-Billion and 50.2% \/ 49.7% respectively. These amount to increases of +2.1% \/ +1.8% and +1.6ppts \/ +2.3ppts relative to our prior forecasts.<\/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>