1Q15 earnings meet estimates. BPI reported Php4.9Bil in net income during the first quarter,
36% higher year-on-year. The growth came from a 15% increase in net interest income to
Php9.43Bil and a 23% rise in non-interest income. Meanwhile, operating expenses grew a
manageable 8.8% for the period. Earnings ended in line with estimates, accounting for 23% of
both COL and consensus forecasts. The first quarter figure translates to an annualized ROE of
13.8%.
Core operations continue steady growth. BPI’s core businesses remained strong during the
period. Net interest income rose 15% year-on-year. This was driven by a 14% rise in net loans
to Php730Bil and a 15% expansion in average asset base. Meanwhile, we estimate that net
interest margin averaged ~2.8% during the quarter, at par with its margins in 1Q14. The bank’s
lending operations were in line with our estimates, with 1Q15 net interest income accounting for
23.4% of our full-year forecast.
Meanwhile, BPI’s non-interest revenues grew 23% year-on-year to Php5.13Bil. This represents
23.3% (in line) of our 2015 forecast. According to BPI, the growth was mainly attributable to
notable increases in its insurance business, fees and commissions, and securities trading. No
other details were given.
Maintaining HOLD rating. We reiterate our HOLD rating on BPI with an FV estimate of
Php107.00/sh based on 2.8X 2015E P/ BV. Although we continue to like BPI given its size and
its track record of superior profitability and asset quality, we believe that its current valuations
are not attractive. Based on our FV estimates, capital appreciation potential is limited at 5.8%.
- COLfinancial
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