SY-LED BDO Unibank, Inc. (BDO) declined last week amid the impact of MSCI rebalancing, foreign buying, and poor investor sentiment towards banks.
A total of 29.72 million BDO shares worth P3.91 billion were traded from May 27 to 31, data from the Philippine Stock Exchange (PSE) showed, making it the second most actively traded stock for the week.
The bank’s share price finished at P130 apiece, 4.2% lower than its May 24 close of P135 each. Year to date, the stock’s price fell by 0.38%.
“Index movement was caused by MSCI rebalancing which the effectivity is on May 31. It looks like the bears took over last week as the stock closed at the lows with foreign sellers reaching P350 million,” said Jeff Radley C. See, head trader at Mercantile Securities Corp., in an e-mail.
BDO is one of 233 additions in MSCI’s Small Cap Index, an index designed to measure the performance of small-cap stocks. This rebalancing was implemented on May 31,
The MSCI indices are reviewed quarterly and rebalanced twice a year to ensure that an index still acts as an effective benchmark for the market it represents.
In a separate PSE report, data showed that the bank has a foreign selling of P703 million last week.
Cristina S. Ulang, research head at First Metro Investment Corp., said in an e-mail that there was poor sentiment towards banks in general due to the resurgence of interest rates and the weak peso outlook.
“BDO is in fact among the strongest banking franchises in the country with robust revenue growth outlook. Interest income is set to grow further from corporate loans in particular as it benefits from the funding requirements of the more active rollout of government infrastructure and public-private partnership projects in the second half of 2024,” said Ms. Ulang.
“It is in the forefront of arranging funding for big ticket infra projects… It is also growing its high-margin middle-market and consumer loan portfolio that were up 7% and 13%, respectively, in the first quarter of 2024,” she added.
In the first quarter of 2024, BDO recorded a 12.1% increase in its attributable net earnings to P18.50 billion from P16.50 billion the prior year.
BDO’s net interest income grew by 12.8% year on year in the first quarter to P48.95 billion from P43.39 in the same period last year.
For the January-to-March period, the bank’s gross revenue reached P66.81 billion, higher by 23.9% from P53.93 billion recorded in the first quarter of 2023.
The Monetary Board this month kept its policy rate at a 17-year high of 6.5% for a fifth straight meeting following cumulative hikes worth 450 bps from May 2022 to October 2023 to help bring down elevated inflation.
Ms. Ulang gave the bank a support level of P125 per share and a resistance level of P145 per share.
Mr. See pegged support levels at P122 and P126 per share, while resistance levels are P150 and P170 per share.
The bank has a total of 1,731 operating branches and more than 5,500 automated teller machines nationwide. It has 16 international offices, including full-service branches in Hong Kong and Singapore, in Asia, Europe, North America, and the Middle East.
“BDO’s wide branch network provides a competitive low-cost source of funding with current account savings account deposits reaching P2.5 trillion in the first quarter. That should help keep loan spreads robust even with the interest rate cycle set for an easing mode in second half of 2024,” Ms. Ulang said. — Lourdes O. Pilar
