Investors urged to keep PHL banks in portfolios

THE Maybank Investment Banking Group (Maybank IBG) maintained a positive outlook on several Philippine banks, recommending investors to keep these banks in their portfolios.

In a brief on Thursday, Maybank IBG shared its outlook on six Philippine banks: the Bank of the Philippine Islands (BPI), BDO Unibank Inc. (BDO), Metropolitan Bank & Trust Co. (MBT), Philippine National Bank (PNB), Security Bank Corp. (SCB) and Union Bank of the Philippines (UBP).

The Maybank IBG is optimistic of the recent digital initiatives of BPI saying this will lead to higher fees and lower costs for the bank. This will also be supported by branch and manpower rationalization efforts. The brief also projected a higher income for BDO at 4.1 percent in 2024 and 5.9 percent in 2025 on the back of “higher-than-expected loan yields.”

As for MBT, Maybank noted its recent dividend declarations as well as its high non-performing loan buffers. Maybank said MBT’S regular dividend was raised to P3 per share from P1.6 per share. It also declared a special dividend of P2 per share which placed the current dividend yield at 8.1 percent.

Maybank IBG was optimistic about the sale of PNB’S foreclosed assets which raised P4.5 billion. This prompted Maybank to increase its net income forecast for the bank to 5.1 percent. “We raise our FY24 net income forecast by 5.1 percent to ref lect the higher-than-expected loan yields in the fourth quarter of 2024,” said the securities broker. “Our BUY is predicated on PNB’S cheap valuations as we remain cautious on its still-elevated

NPLS (non-performing loans).”

Meanwhile, Maybank IBG said it cut its income forecast for SCB’S by 1 percent in 2024 and 8 percent in 2025. This was largely due to “huge trading & forex loss amounting to P1.1 billion in the fourth quarter of 2023, coupled with higher- than-expected opex and provisions growth.”

As for UBP, Maybank IBG said, 2023 was a “year of one offs” for the Philippine bank given the integration of Citi in UBP and the expansion of Uniondigital. The analyst expects UBP to still incur significant costs for Uniondigital and loan growth to be at 10 percent, the same as last year’s growth.

“We forecast lower costs for Citi and credit costs normalizing to 1.6 percent for FY2024 from 2.6 percent in FY2023, such that we forecast FY2024 net income to rise 62 percent year-on-year,” Maybank IBG said. In a recent forum sponsored by the Finance Executives of the Philippines, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. noted the health of local banks.

“The banks are okay. The banks should be doing well. They should be able to finance growth,” Remolona said.

Remolona said in so far as the capital adequacy ratio of the banking industry, the average is at 16.4 percent. This is well above the regulatory standard or the regulatory floor at 10 percent. He also noted that in terms of the liquidity coverage ratio (LCR), this was at 183 percent. This is also higher than the 100 percent regulatory standard.

The BSP Governor also said the average non-performing loan ratio remains manageable at 3.2 percent even if loans were growing at 9.8 percent.