{"id":332167,"date":"2025-04-08T00:54:46","date_gmt":"2025-04-07T16:54:46","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=332167"},"modified":"2025-04-08T00:54:47","modified_gmt":"2025-04-07T16:54:47","slug":"commentary-secb-ew-are-our-banking-stock-picks","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/commentary-secb-ew-are-our-banking-stock-picks\/","title":{"rendered":"Commentary: SECB, EW are our banking stock picks"},"content":{"rendered":"\n

Consumer-driven growth<\/strong><\/p>\n\n\n\n

The BSP\u2019s February 2025 bank lending data showed a notable growth rate of 12.2% year-on-year (YoY) driven by all-around loan growth spearheaded by Consumer loans which grew almost twice as fast at 24.1% led by credit cards (+28.9%) and motor loans (+19.2%). Production loans also grew at a pace of 11.2% YoY attributable to increased lending in the electricity, gas, steam and air-conditioning supply industries (+21.5%), wholesale and retail trade (+13.7%), construction (+12.7%), and transportation and storage (+20.6%).<\/p>\n\n\n\n

Supporting our narrative<\/strong><\/p>\n\n\n\n

We have previously released numerous analyses over the past weeks and months wherein we provided our outlook on loan growth, particularly the consumer\u2019s role as the key driver for this growth moving forward. Additionally, we reiterated our optimistic outlook for the banking sector in the following quarters driven by expectations of the rate cut cycle\u2019s continuation alongside the reserve requirement ratio (RRR) cut that took effect on March 28. Both these policy measures should help banks continue their shift towards volume-driven earnings growth in the following quarters.<\/p>\n\n\n\n

The beneficiaries<\/strong><\/p>\n\n\n\n

We see this as an overall positive development in the sector, particularly for banks with (1) considerable exposure to consumer loans like EW, with the sub-segment accounting for 82% of their entire portfolio and (2) banks that are currently doubling efforts to grow this segment such as SECB, as shown by the sub-segments substantial growth rate of 63.7%, which led to consumer loans accounting for 38% of their total loan book for FY24, up 9ppts from FY23\u2019s 29%.<\/p>\n\n\n\n

Risk managed expansion<\/strong><\/p>\n\n\n\n

Despite our optimism, we note that consumer loans are typically riskier, which means that the banks that we have mentioned should maintain a balance between pushing their consumer loan portfolios to greater heights which should effectively translate to higher NIMs, while at the same time keeping their NPLs and NPL ratios at manageable levels.<\/p>\n\n\n\n

Maintaining BUY on SECB, EW<\/strong><\/p>\n\n\n\n

In accordance with our projection that consumer loans will resume its upward
trajectory moving forward, we reiterate our BUY ratings for banks which stand to benefit from this, namely SECB (Target Price: P117.18) and EW (Target Price: P12.30) brought by their continued efforts to expand their respective consumer loan portfolios.<\/p>\n\n\n\n

<\/div>\n\n\n\n

This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1124,11],"tags":[],"class_list":["post-332167","post","type-post","status-publish","format-standard","hentry","category-commentaries-special-reports","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/332167","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=332167"}],"version-history":[{"count":1,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/332167\/revisions"}],"predecessor-version":[{"id":332169,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/332167\/revisions\/332169"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=332167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=332167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=332167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}