Maximizing investment in a volatile environment with BDO Securities

Knowing how to properly invest, particularly in the stock market, is key to successful financial planning and thus in productively making money grow. Investors should constantly be aware of the latest developments in the economy and across industries, as well as how such trends affect the stock market in order for them to decide about their next moves for their respective portfolios, whether to buy, sell, or hold.

The performance of listed banks, for instance, have been affected by high inflation and borrowing costs during the third quarter of the year, according BDO Securities Research Head Abi Chiw.

“High inflation and borrowing costs during the quarter continued to curb credit demand with industry loan growth slowing further to 6.5% in September vs. 7.8% in June,” Ms. Chiw said in an email to BusinessWorld. “Nonetheless, banks are still able to deliver robust net interest income growth on higher loan margins and additional yield income from investment securities.”

The big banks, including BDO Unibank, Inc., were able to maintain earnings growth and double-digit return on equity (ROEs). Asset quality of their loan portfolios also remain strong despite the high interest rate environment, with nonperforming loan ratios still benign at 1.7%2.0%, Ms. Chiw said.

Going forward, Ms. Chiw noted that economic trends affecting loan demand will likely to be monitored by market players. “Improving GDP growth and household incomes are likely to encourage consumer segment growth (credit cards, auto loans, home loans), while still elevated interest rates are seen to discourage companies from taking on new debt,” she said.

Regarding the impact of recent developments (BSP keeping interest rates at high levels and the IsraelHamas conflict, to name a few) on the prospects of bank stocks in the coming quarters, banks generally benefit from higher-for-longer interest rates since it helps loan yields. However, prolonged periods of high interest rates may also bring about the risk of rising problem loans.

“Philippine banks and the BSP (Bangko Sentral ng Pilipinas) are monitoring the war between Israel and Hamas, since the risk of increasing tensions in the Middle East region may exert upward pressure to global oil prices and inflation, which in turn, would have negative spillover effects to economic growth and equity markets,” Ms. Chiw explained.

Ranked as one of the leading investment banks in the Philippines, BDO Securities, a BDO Capital & Investment Corp. subsidiary, is stepping up its game in helping Filipinos invest, from investment funds to bank stocks, fixed-income securities, and more.

Whether their clients seek to starting up, build, or expand their wealth, BDO Securities is there to serve Filipinos and guide them through achieving their financial goals. As a full-service brokerage firm, BDO has got clients covered with trading, diversification of investments, and research reports.