{"id":327646,"date":"2024-04-25T01:56:30","date_gmt":"2024-04-24T17:56:30","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327646"},"modified":"2024-04-25T01:56:32","modified_gmt":"2024-04-24T17:56:32","slug":"stock-in-focus-bdo-unibank-inc-bdo-25-apr-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bdo-unibank-inc-bdo-25-apr-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: BDO Unibank, Inc. (BDO) – 25 Apr 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>25 April 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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Recent market movements have tempered BDO\u2019s price down to more attractive levels. Given the stock\u2019s ample upside of 14.6% at current levels, we are therefore recommending a BUY on BDO at our current Target Price of P169.70.<\/p>\n\n\n\n

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

Earnings came in as expected<\/h3>\n\n\n\n

BDO\u2019s earnings for the first quarter of the year clocked in at P18.5-Billion, on par with our 2024 forecast (23.8%). While profits were down by 5.1% quarter-on-quarter (QoQ), we note that this may likely be due in part to some seasonality as cost-to- income tends to rise in Q1 on volume-related expenses.<\/p>\n\n\n\n

Nevertheless, we should also point out that the current ROE of 14.30% is the bank\u2019s lowest since the 11.50% last seen in 2Q22. While no exact numbers have been given yet, we think that additional impact may have come from the net interest margin (NIM) side as well as from provisioning expenses.<\/p>\n\n\n\n

Net interest income expands, but…<\/h3>\n\n\n\n

The bank generated P49.04-Billion in net interest income for the quarter, up by 13.0% versus year ago levels. This came on the back of a sizable improvement in lending volumes as loans expanded by 13.0% to P2.91-Trillion. <\/p>\n\n\n\n

On a sequential basis though, net interest income was practically unchanged despite loans growing by 2.2% QoQ. It is because of this that we think that there may have been some possible NIM compression in 1Q24, likely on the back of the continued rise in deposit costs. In conjunction with this, BDO\u2019s management did mention during their 4Q23 briefing that they were starting to see a bit of a resurgence in funding costs and this may have affected their 1Q24 numbers.<\/p>\n\n\n\n

Non-interest income is solid<\/h3>\n\n\n\n

Non-interest income meanwhile improved by 11.0% to P21.0-Billion as the bank
benefited from increased fees, steady treasury and FX, along with recovery in the life insurance business. With regard to credit quality, BDO saw its NPL ratio decline by 10bps YoY to 1.88%. <\/p>\n\n\n\n

Nevertheless, it would seem that the bank still opted to take a more conservative approach as evidenced by the 10.6ppts growth in its NPL coverage to 181.0%. As such, we think that provisioning expenses for the quarter may be higher YoY.<\/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>