Higher interbank ATM fees, release of bank NPLs drive profit-taking in BDO stock

THE latest banking system data published last week by the central bank and the subsequent profit taking by market players drove BDO Unibank, Inc.’s stock activity last week.

A total of 18.27 million BDO shares worth P2.01 billion were traded from Jan. 8 to 11, data from the Philippine Stock Exchange showed, making it the fifth most actively traded stock in the local bourse.

BDO’s share price dipped 1.8% on a week-on-week basis to P107 apiece on Friday. Year to date, the bank’s share price has gained by 1.9%.

“[I]nvestors digested the latest data about the tempered NPL (nonperforming loans) formation in December as well as the looming increase in fees for ATM transactions,” Unicapital Securities, Inc. Research Head Justin Lawrence J. Tembrevilla said on Thursday in an e-mail.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco saw last week’s trading activity as “investors choosing to book gains causing BDO to end the week in the negative territory.”

“In the prior trading week, BDO surged 8.24% week on week to P109,” he said in a separate e-mail.

Last week, several banks announced higher ATM transaction fees starting April 7 as they migrate to a new charging method where a cardholder is charged for a transaction based on the fees imposed by ATM owners. This is in contrast to the current issuer-based method wherein a fixed transaction fee is charged to the cardholder regardless of the owner of the ATM terminal where the transaction was made.

ATM withdrawal fees currently range from P10 to P15. With the new system, these charges are expected to range higher from P10 to P18. BDO is set to charge P11 per withdrawal and P2 per balance inquiry done by non-cardholders in its ATMs.

Meanwhile, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday gross NPL ratio of banks easing to 3.61% in December from 3.78% as of end-November, but higher than the 2.08% logged in 2019. Still, the latest figure was better than the 4.6% projection by the BSP for end-2020.

NPLs include credit left unpaid at least 30 days beyond the due date, which are considered as risky assets for banks as these have a high risk of default.

The decline in December ended a 10-month streak of increase in bad loans. However, analysts are expecting this to be temporary as the 60-day moratorium introduced by Republic Act No. 11494 (Bayanihan to Recover as One Act) expired in end-2020.

“We believe that its fundamentals remained intact despite the pandemic. We also note that BDO had the cheapest funding cost and the highest net interest margin (NIM) among the ‘Big Three’ as of Sept. 2020,” Mr. Tembrevilla said, referring to the ratio that measures a bank’s efficiency in investing funds by dividing annualized net interest income to average earning assets.

“We forecast full-year 2020 net income to hit P27.8 billion, a 38% decline from 2019, weighed by the accelerated loan loss provisions,” he added.

Philstocks’ Mr. Tantiangco noted that BDO in the nine months to September increased its loan loss provisions by more than five times to P23.8 billion that dragged its net income by 48.2% to P16.62 billion.

“Still, we saw some bright spots in the company’s results. Net interest income in the first nine months of 2020 posted a 13% year on year growth. Net interest margins at that time stood at 4.36%, higher than the same period in the prior year’s 4.12%, and the bank’s 2015-2019 average of 3.54%,” he said.

For the third quarter alone, the listed bank posted a 3.2% year on year increase in its net income attributable to parent to P12.33 billion.

“Moving forward, for 2021, we’re projecting a 17% growth in BDO’s net income attributable to parent. This is hinged upon the expectation that business and consumer confidence… will continue to improve, which in turn, would lead to more bank lending activities,” Mr. Tantiangco added.

He sees the support range from P100 to P103.50 apiece and resistance from P114 to P115 in the coming weeks.