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OUTLIER: Investors lukewarm on BPI after first-half earnings drop

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INVESTORS rebalanced their positions on Bank of the Philippine Islands (BPI) last week after it released its first-half earnings report.

A total of 13.62 million BPI shares worth P961.40 million were traded from July 20-24, data from the Philippine Stock Exchange showed.

Shares in the Ayala-led lender finished P69.50 apiece last Friday, down 1.2% from a week ago. Since the start of the year, the stock has shed 21% off its price.

BPI was among the most actively traded last week after some investors rebalanced their positions after the release of the bank’s first-semester earnings report on July 16, said Wendy B. Estacio, senior equity research analyst at the Philippine National Bank’s research division.

“It appears that the company’s results were generally in line with the market’s expectations,” she said in an e-mail last Friday.

“This is not a surprise at all,” Piper Chaucer E. Tan, client engagement officer and research associate at Philstocks Financial, Inc., said in a separate e-mail.

Mr. Tan said all listed banks would post lower bottom lines this year as they hike their loan-loss provisions to safeguard their assets.

BPI’s net profit dropped by nearly a fourth to P5.29 billion in the second quarter. This brought the lender’s first-half bottom line to P11.68 billion, falling 15% from a year ago.

The lender traced the decline to higher loan loss provision during the first semester amounting P15.01 billion, 4.3 times more than it set aside a year ago, to cover for potential souring debts brought by the coronavirus pandemic.

As of end-June, BPI’s nonperforming loan (NPL) ratio stood at 1.83%.

Although the bank has benign NPLs as of the first semester, “we anticipate BPI to continue building up provisions for the balance of the year anticipating for the worst-case scenario,” Ms. Estacio said.

BPI’s fundamentals “remain strong and by increasing its provision for credit losses is a stamp that they are addressing the problem which we see in the near term,” Mr. Tan said.

Ms. Estacio sees BPI finishing the year with a P21.26-billion net income, while Mr. Tan estimates the lender’s bottom line at P21.23 billion.

For this week, Mr. Tan pegged BPI’s primary and secondary support price levels at P69.50 and P64.10, respectively, while its primary and secondary resistance price levels at P75.40 and P78.80.

“We have an ‘outperform’ rating for BPI despite modest loan yields and elevated provisioning, as we view its current loan mix as relatively safe and stable compared to its peers,” Ms. Estacio said. — MAPS





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