By Marissa Mae M. Ramos, Researcher
ECONOMIC uncertainty brought about by the pandemic’s “new normal” prompted investors of BDO Unibank, Inc. to take profit, making it the fourth most actively traded issue last week.
A total of 15.09 million BDO shares worth P1.62 billion were traded from June 8 to 11, data from the Philippine Stock Exchange showed. Financial markets were closed on June 12 in observance of the Philippine Independence Day holiday.
The share price of the Sy-led lender closed at P105 apiece, down 7.9% from June 5’s closing price of P114 apiece. Since the start of the year, the bank’s share price has slipped 31.8%.
“[T]he activity of BDO stock, in particular, is a result of taking profits of investors as the optimism for the economy dissipates…,” Philstocks Financial, Inc. Client Engagement Officer and Research Associate Piper Chaucer E. Tan said in an e-mail.
Mr. Tan said reopening of the US and the Philippine economies even with rising coronavirus disease 2019 (COVID-19) cases as well as the impact of the “new normal” on the global economy worried investors.
He said the continuing uncertainty led investors to shy away and move to safe-haven instruments such as commodities and fixed income.
For Unicapital Securities, Inc. Technical Analyst Cristopher Adrian T. San Pedro: “A cash dividend of P0.30 with an ex-date of June 11, prompted the investors and short-term traders to profit take before the Independence Day long weekend.”
Both analysts also noted the activity as influenced by foreign exit with net foreign selling for BDO last week amounting to P168.38 million.
Restrictions for one of the world’s longest lockdown were eased on June 1, putting the National Capital Region, Cagayan Valley, Central Luzon, Calabarzon, Pangasinan, Albay and Davao City under general community quarantine which allowed most businesses to operate at 50% of full capacity.
However, data from the Department of Health show new COVID-19 cases are still hundreds each day with the total reaching 25,392 as of June 13 and more than a thousand Filipinos dying because of the disease.
“The bank is well-capitalized to withstand the impacts of the COVID-19 pandemic particularly when it comes to nonperforming loans (NPLs). They have enough buffer when it comes to liquidity, asset quality, and solvency,” said Mr. San Pedro, who expects the bank to post a net income of P46 billion this year.
He said the lender’s income would depend largely on the impact of the local and global market conditions to its portfolio, adoption of digital payments through its e-money platforms, the extended lockdown that dragged credit activity, as well as the expected spike in NPLs.
Philstocks Financial’s Mr. Tan has the same assessment but noted that BDO and other banks would remain resilient as the sector would not experience a “full stop” like tourism and transportation.
“The measure of the banks right now is to increase the provision for losses to mitigate the effects of an increase in bad loans, but as far as listed banks are concerned, most especially BDO, strong and prudent balance sheet can weather this pandemic together with monetary easing,” he said.
Mr. Tan sees BDO logging a P34.26 billion net income this year.
In a disclosure to the bourse on June 1, the bank said it would set aside an additional P20 billion for its loan loss provision, which is on top of the P2.1 billion it set aside in the first quarter. The bank said it was anticipating the “expected disruptive economic impact” of the pandemic and the lockdown imposed by the government.
The lender’s NPL ratio was at 1.3% and NPL cover was at 151.4% in the first quarter. Its attributable net income dropped 10.2% to P8.77 billion.
Moving forward, Mr. Tan sees “primary resistance of BDO pegged at P116.2 and secondary resistance at P140.1. As for the primary support [it] is spotted at P100 and its secondary support is at P86.5.”
Mr. San Pedro, meanwhile, forecast a support and resistance range of P97.85 to P114 in the short term.
“It needs to stay above P114.00 to establish a potential trend reversal with a target of P120.00 and P130.00 resistance levels,” he said.
