BNP Bank Paribas Pregrine, 2TradeAsia.com, Abacus Securities, and G.K. Goh Securities, all cite BPI’s undervalued stock, a low and still declining non-performing loan ratio (NPL), and a return-on-equity ratio that is approaching double digit levels.
In addition, analysts cite BPI conservative management as a key factor in its strength in the face of aberrations in the economy. For example, Edgar Bancod research head of BNP Bank Paribas Peregrine Securities Philippines says that even while BPI’s NPL is relatively low compared to the industry trend, it has been beefing up reserves. It also has the highest coverage. BPI has some P4.3 billion tucked away – that is money it could have booked as earnings but it did not, Bancod said. Astro del Castillo of A&A Securities said that these tactics have enabled BPI to weather some of the stormiest chapters of the Philippines’ political and economic history.
Analysts say that BPI is on its way to closing the year with impressively strong figures. Multex Global said that its estimate of 23 brokerage houses revealed a consistent net profit estimate P5.12 billion, about 68 percent more than last year’s P3.05 billion.
These estimates are consistent with the performing ratios BPI is exhibiting from recent quarters. Analyst Leny de la Rosa of G.K. Goh Securities Philippines said tha the 21 percent to 22 percent capital asset ratio maintained by BPI – the principal measure of a bank’s adequacy, is one of the highest in the local banking industry. Return on equity is conservatively forecast at 9.3 percent with a possible 10 percent for the year by Emilio Neri, analysts for Abacus Securities. BPI’s figures are a world apart from other local banks, Neri said.
BPI’s NPL, despite a slight quarter on quarter decline to 12.8 percent in September from 12.6 percent last June remains the lowest in the Philippine banking industry which averages 18 percent. The slight ease out in BPI’s NPL was attributed to a 14-percent contraction in its loan portfolio to P23.8 billion.
For the January to September period this year, BPI’s earnings grew 72 percent to P4.58 billion due to lower loan-loss provisioning and other earnings from foreclosed assets. Net interest income was marginally higher at P10.59 billion from P10.43 billion last year despite undershooting this year’s loan level target by P10 billion.