{"id":327652,"date":"2024-04-25T02:05:52","date_gmt":"2024-04-24T18:05:52","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327652"},"modified":"2024-04-25T02:05:54","modified_gmt":"2024-04-24T18:05:54","slug":"stock-in-focus-bank-of-the-philippine-islands-bpi-25-apr-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bank-of-the-philippine-islands-bpi-25-apr-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Bank of the Philippine Islands (BPI) – 25 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>25 Apr 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 128.72<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Given the solid set of 1st quarter (1Q) earnings, we would therefore recommend a BUY on BPI with a Target Price of P128.72. We will likely be reviewing our forecasts with regard to loan growth and OPEX, as the former will likely have to be lowered a bit although this would made up for by some tempering in the latter.<\/p>\n\n\n\n

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

Solid start to the year<\/h3>\n\n\n\n

BPI reported a solid line of results for the first quarter with 1Q 2024 profits amounting to P15.26-Billion, tracking in-line with our full-year forecast (28.0%). The biggest driver for earnings performance came on the cost side, with OPEX contracting by double digits on a QoQ basis. Additionally, the bank also benefited from the contribution of newly integrated Robinsons Bank loans.<\/p>\n\n\n\n

Net interest income stays on track<\/h3>\n\n\n\n

For the first quarter, the bank managed to stave off fears that funding costs were finally catching up with yields, as 1Q 2024 NIM inched up QoQ by 5bps to 4.19%. This was a bounce back compared to the 2bps QoQ compression that we saw in 4Q23. As a result, even with the CASA ratio (down to 64.78%) continuing to see pressure, net interest income still rose by 23.6% YoY \/ 8.3% QoQ to P29.85-Billion, matching our expectations. <\/p>\n\n\n\n

While there were some inorganic factors that aided in the growth, namely the integration of new Robinsons Bank Corp. (RBC) loans into the fold, management noted that the biggest driver behind NIM performance was their strategy to deliberately pursue higher yielding loans in the consumer space. <\/p>\n\n\n\n

Loan growth-wise, the bank\u2019s book expanded by 18.7% (11.9% excluding RBC loans). While this is tracking slower than our full year growth estimate of 27.18%, this was nevertheless offset by BPI\u2019s NIMs managing to outpace our full year forecast, for now at least. Moving forward, the bank notes that efforts to strengthen CASA will center around the pursuit of more payroll-related deposits, given the high liquidity needs of their depositors.<\/p>\n\n\n\n

Credit quality sees some decline<\/h3>\n\n\n\n

The tradeoff to the bank\u2019s strategy of focusing on high yield consumer loans came in the form of a higher NPL ratio (2.12%) and a lower NPL coverage (136.20%). The former was up by 30bps versus last year, while the latter was down by 40.5ppts YoY as growth in the quarter\u2019s provisioning was likely not enough to offset the climb in NPLs. A total of P1.5-Billion worth of provisioning expenses was recognized by the bank in 1Q 2024, up from last year\u2019s P1.0-Billion. <\/p>\n\n\n\n

Despite this, the bank stated that they were not worried by the weaker NPL cover given that they already had a hefty amount of collateral set aside to cover for any potential defaults. Nevertheless, we think that if the NPL cover starts to get close to the 100%-mark, then we may see a pickup in provisioning recognition.<\/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>