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BANKS: What is the strongest bank in PH?

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BANKS: What is the strongest bank in PH?

I used to say, "the strongest bank" must be BPI, Bank of the Philippine Islands, because it is large, and about 50% owned by Ayala. 

Big 3: Now I think it may be more complicated, and three big banks are all clustered together at the top, in terms of Size & reputation.

Each of these three is affiliated with a big property developer, and between them, they hold almost HALF of the P14.5 Trillion of assets (at mid-2018) held by all the so-called Biog Banks within the PH banking sector.  This is a high concentration, and may help to explain the relative lack of innovation and competitive pressure in PH.  Will we see more competition in the future?  I think that is likely.

Top 3 Banks : YTD: +1: 10d/ 5.26.20: BD0-85.90 : MBT:-33.20 : BPI-63.00 : SECB-77.10 / M/D-r: 38.6%, M/S-r: 43.1%

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PHL-BigBanks: Since 2010: 2015: '18: '19: YTD / BD0-89.60 : MBT:-34.00 : BPI-62.30 / Mbt/bDo-ratio: 37.9%

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MTB versus Two "successful innovators": UBP & SECB ... update : fr.8/2016: (to may'20)

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Other Top 12 banks ... RCB +etc- Aug'16:

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YE-2019=: - BDO- : - MBT- : - BPI- : -SECB : - UPB- :  Top3- : - PHL :
Deposits- : 2,485B : 1,714B : 1,728B: 499.6B: 484.3B: 5,927B: 13.1Tr :
MktShare: (19.0%) (13.1%) (13.2%): (3.81%) (3.69%) (45.2%) (100%)
Equity —  : 368.9B : 309.6B : 269.6B: 118.3B: 97.50B: 948.1B:
Dep.Lev. : (r6.74x)  (r5.54x) (r6.41x) (r4.22x) (r4.97x) (r6.25x)
CapAd.R :  12.6 % : 17.5 % :  15.2 % :  - N/A - :  - N/A - : 14.1 % :
Net Inter : 119.9B : 77.00B : 65.95B : 26.84B : 22.34B :
LoanAdv.: 2,485B : 1,831B : 1,728B : P512.B : 541.0B :
NetintMar: 4.82 % : 4.21 % :  3.82 % :  5.21 % : 4.13 % : 0.00 %:
Book.Val.: P32.62 : P68.83 : P59.81 : P157.0 : P80.07 :
YE-2019-:  158.00 : P66.30 : P87.90 : P180.3 : P57.70 :
% BookV. :  484.% :  96.3%  : 147.0% : 114.8% :  72.1% :
Total Inc. : 221.2B : P28.1B : P130.B : P10.1B: P14.0B :
Cost/Inc. :  73.2% :  54.6%  :  70.4%  :  75.8%  :  72.5% :
Earns/sh. : P10.01:  P 6.24 :  P 6.39 : P13.40 : P11.52 :
Ret.on BV : 30.7% :  9.07%  :  10.7%  :   8.54% :  14.4% :
Inv.Gr.-M. : XXXX  :   Baa2  :

YE-2015=: - BDO- : - MBT- : - BPI- : - Top3- : - PHL : Pct.: M/D-r:
Deposits- : 1,679B : 1,258B : 1,123B : 4,060B : 9.74Tr :
MktShare : (17.2%)  (12.9%)  (11.5%): (41.7%) (100%)
Equity —  : 199.0B : 193.8B : 150.3B : 543.1B :
Dep.Lev.  : (r8.44) : (r6.49) : (r7.47) : (r7.48) :
Book.Val. :  P17.51 : P60.93 : P38.25 :
YE-2015-: 100.33 :  P68.11 : P81.54 :
% BookV. : 573.% :  111.8% :  213.% :
Earns/sh. : P 6.74 :  P 5.70 :  P 4.64 :
Ret.on BV : 38.5% :  9.35% :  12.1% :
=======

The Top three banks are also at the Top in terms of Credit Ratings

Long Term Default ratings:
BBB- : BPI, BDO, and Metrobank
BB +  : China bank, PNB, and RCBC

(" The usual rule is that a bank located within a country will not get a higher rating than the country itself. The state-owned banks, Development Bank of the Philippines (DBP), and Land Bank of the Philippines (Landbank), also got the 'positive' rating, mirroring the rating they gave to the country )

> Related : Are PH banks safe? (Top rating is BBB-

Home Loans - A Guide for the perplexed

 

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Top three PH Banks, Statistical Profile
============= : - BDO -  : - MBT -  : - BPI -  : Total - : US$ at 53.5
Price End'17:        P164.00 : P 85.17  : P108.10 :
Share Price- :        P127.10 : P 65.13 : P 99.55 :
YearTo Date :         - 22.5% :  - 23.5% :  - 7.91% :
Shares O/S- :         4.37 Bn :  3.98 Bn :  4.50 Bn :
MktCpPhp,B :        P 555 B : P 259 B :  P 448 B : P1706 B : $ 31.9 Bn :
BookVal.Eqty        P 303 B :  P 278 B :  P 240 B : P 821. B : $ 15.3 Bn :
Mkt to Book :        183.2 % :  93.23 % :  186.7 % :
Assets, mid-'18 : P2,877B : P2,173B : P1,875B : 6,925B : $129Bn, or 47.5%*
Loans, mid-'18- : P1,900B : P1,324B : P1,220B : 4,444B : $83.1Bn
Growth, 2017  :    + 19 % - : + 18 % - : + 16 % - :
Net Int Margin   :     3.8 % : :   3.5 % : :    3.0 % ::
Income--------------: P 13.1B : P 11.0B :  P 11.0B : First Half 2018
Chg.vs 2018------ :  -- 1 % - :  + 16 %  :  -- 6 % - :
Group Owned--- ::  38.2%+ : :  36.4% : :  48.2% : Sy family also owns BDO Pfd.
*47.5% of BigBanks assets/resources of 14.57 T/ $272Bn, see 8/26 post below

Metrobank's recent Investor Presentation, had some useful comparisons of the Top banks

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PH is still under-banked. Less than Indonesia, Vietnam, and even Laos

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A strong first half for Metrobank, relatively speaking

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PH Bank stocks trade at a nice premium to Book Valuations

71yPTxl.png

> source : 1H-2018 MTB Investor presentation

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GTCap, largest owner of Metrobank (MBT) shares, looks deeply undervalued

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GTCap vs. MBT, MPI , psei ... 10yr : fr. 4/2015 +psei: 3yr : 1yr / Last: 870.0, 176.3, 5.02

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VALUATIONS: stock Mkt-Caps & estimated

Symbol : Company--- : Shares- : Price : MktCap : GTshare: Value--- :
GTCap -: GT Capital- : 199.3 M : 870.0 : 173 Bn : 100.0% : P 173.3B : 34.1% Value?
Public
MBT -- : Metrobank-- : 3.98 Bn : 65.00 : 259 Bn : 36.36% : P 094.2B :
MPI -- : MetroPacific : 31.5 Bn : P5.02 : 158 Bn : 15.55% : P 024.6B :
====== : Public Co's-: ============: 279.7B : ====== : P 114.8B :
Toyota Motors--------- : Not available-- : 000.0B : 51.0 %
Toyota Fin'l Svcs.----- : Not available-- : 000.0B : 40.0 %
Toyota Manila Bay--- : Not available-- : 000.0B : 58.1 %
Toyota Subic------------ : Not available-- : 000.0B : 55.0 %
===: Auto-Sub-Total- : Not available-- : 162.7B : >>>>>> : 32% of Value ("plug" estimate)
====== : Non-Auto--- :
Federal Land------------ : Not available-- :   50.8B : 100. % : 10% of Value   "   "
Pro+Friends------------- : Not available-- : 000.0B : 51.0 %
AXA Insurance--------- : Not available-- : 015.0B : 25.3 % :   3% of Value   "   "
Sumisho------------------- : Not available-- : 000.0B : 20.0 %%
===========: Total- : Not available-- : 508.0B : ====>  : 279.7B/ 55%: Estimated based on Income Figures

GTcap Looks CHEAP at under 900p (& just 493% of MTB's valuation, should be 7x) / & at near 11% of PSEI
GTcap could be an interesting buy, backed up by its valuable shareholding in MTB, and all the Private Co's.
Imagine getting the Auto companies, Federal Land, and AXA for free (!!)
GTCap's interests in MTB & MPI alone are worth 161% of the MktCap of GTCap.

yLH7XXP.png

HISTORICAL Estimates-- : %index PSEI : <------ Public Shares------>: Value: Full :  vvv : TMP : FDL: AXA: Pri . :
Timing----: GTcap, 199.3- : Pct.,   Index : MTB--,1.45B : MPI--, 4.9B : 55%: 100%: Pct.- : 32% : 10%: 3% : 45% :
08/24/18: 870.0, 173.3B : 11.2% 7766 : 176.3, 256B : P5.02, 25B : 281 : 510B, 34.0%: 163 : 51. : 15. : 229 :
12/29/17: 1292., 257.5B : 15.1% 8558 : 171.0, 248B : P6.85, 34B : 282 : 513B, 50.2%: 164 : 51. : 15. : 231 :
12/29/16: 1270., 253.1B : 18.6% 6841 : 155.6, 226B : P6.66, 33B : 259 : 471B, 53.7%: 151 : 47. : 14. : 212 :
12/29/15: 1320., 263.1B : 19.0% 6952 : 124.0, 180B : P5.20, 25B : 205 : 373B, 70.5%: 119 : 37. : 11. : 168 :
12/29/14: 1032., 205.7B : 14.3% 7231 : 127.5, 185B : P4.60, 23B : 208 :
12/29/13: 772.?, 000.0B : 00.0% 5890 : 116.0, 168B : P4.32, 21B : 189 :

=======

GTcap - update, since : 1/2012, w/psei : 1/2014, w/psei : 1/2015 ... : Last: P870 is 11.2% of PSEI of 7,766

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GTcap : 1/2012, w/psei , +AC : before split: 2012-14 :

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BANKING SYSTEM 'SOUND'; resources grow 10.2% in H1

( Manila Bulletin headline, 8/26/2018 )

The Banking sector reported P 16.065 Trillion  combined total resources (/53.46 = US$ 301Bn) as of the end of June, up 10.2% yoy.

+ Big bank resources, increased by 10.79% to P14.57 T (= US$ 272 Bn.) vs. P13.15 T
+ Thrift bank resources were up 4.56% to P 1.237 T (= US$23 Bn.)
+ Non-bank financial assets  were P 3.52 T (=US$66 Bn), and Rural banks had  P 259 Bn (=US$4.8 Bn.) at 3/31/2018, where reporting lags
As of the end of June, the bank industry's asset quality "remains satisfactory," said BSP governor Nestor Espenilla, and there was:
"A continuing build-up in capitalization," with capitalization ratios as follows:

Big Banks Ratio, Solo : 14.48% x P14.57 T (US$272.5 Bn) = $39.5 Bn Capital in Big Banks, top 3 have $15.3 Bn
Consolidated basis---- : 15.07%

 

 

 

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Is the Age of Double-digit asset growth rates over for banks?

(asks Business World: 8/28 on page 1)

Over Php 15 Trillion of assets in banking system : ie 43 universal & com'l banks

PH BANKS,
Year: --- Q1 -- : --- Q2 -- : --- Q3 -- : --- Q4 --- : % chg. :
2013: 07.734T : 08.319T : 08.868T : 09,691 Bn :
2014: 09.811T : 10.031T : 10.180T : 10,889 Bn : + 12.4%
2015: 10.736T : 10.887T : 11,282T : 11,529 Bn : + 5.88%
2016: 11.933T : 12.300T : 12.558T : 13,343 Bn : + 15.7%
2017: 13.537T : 14.013T : 14.331T : 14,878 Bn : + 11.5%
2018: 15.022T : 15.394T :

chg. :  + 11.0% : + 9.86% :

Top 12 Universal and commercial banks

 1. BDO - : BDO Unibank (SMPH group) is #243 Globally)
 2. MTB - : Metropolitan Bank and Trust / Metrobank (GPCAP group)
 3. BPI -  : Bank of the Philippine Islands (AC - Ayala group)
 4. Govt- : Landbank of the Philippines / Landbank (PH govt owned)
 5. PNB - : Philippine National Bank
 6. SECB- : Security Bank Corp
 7. CHIB- : China Banking Corp.
 8. Govt- : Development Bank of the Philippines (DBP, secondary govt bank)
 9. UBP - : Union Bank of the Philippines
10. RCB - : Rizal Commercial Banking Corp. (RCBC)
11. Priv- : United Coconut Planters Bankers (UCPB)
12. EW -- : East West Banking Corp (EastWest bank)

> 43 U&C banks +55 savings banks, wiki: /List_of_banks_in_the_Philippines

Q2's slower growth broke a string of nine straight quarters of double digit growth in assets.

The banks were more profitable, even as growth in assets slowed.

Money Lent was Php 8.41 Trillion (54.6% of Total assets) at mid-2018, and that was an increase of 18.2% more than the P 7.12 trillion one year earlier.

In terms of profitability, the median return on equity improved to 6.38%, from 5.09% in the first quarter, and 4.70% in the prior year's second quarter.

Fastest growing banks:
+ Robinsons Bank ------------- : +42.1% year-on-year
+ Land Bank of Philippines : +35.7%
+ Asia United Bank ------------ : +26.2%

Metrobank displaced BPI as #2 in deposits

===

There is no evidence of slowing loan demand, with that 18% yoy rise,

Maybe banks are selling down "other non-loan assets" to invest in high-risk rating loans.  Some of those other assets may have a lower capital requirement, so banks may need to sell more of them to add loans.  The jump in income is another sign of the shift towards Loans

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LOAN DEMAND strong. Record 5-yr US Debt raising by BPI

BPI raises record $600M from maiden notes issuance (per Philippines Star)

Ayala-led BPI raised $600 Million in the offshore debt market - highest ever - through unsecured 5 year fixed rate notes "to lengthen the maturity of the bank's borrowing".

+ Coupon was 4.25% (in US$), and would be listed on the Singapore stock market

+ The fund raising was part of the bank's $2 Billion medium term note program

+ At end March 2018, 167-year old BPI was the third largest bank, by assets. Assets were up 10.4% to P1.91T (= $35.7 Bn at 53.5)  Capital was up 10.3% at P189.5 Bn (with a capital adequacy ratio of 13.55%). 

+ The bank has raised P50billion from a rights issue to fund its growth

+ Earnings of BPI slipped 5.7% to P11.03 billion in the first half

===

Another sign of strong loan demand is rising rates

7-day term deposits hit a record high of 4.29Percent. And 14d deposits were also at a record of 4.39percent (both figures rounded upwards)

The BSP hiked its benchmark rates twice, by 25 bp, on May 10 and again onJune 20th - and then by 50 bp on Aug.9th

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The most innovative bank... possibly

UnionBank /PH:UBP sets rights offer at P62.97/ sh... all : 5yr / Cl.: P78.90 -1.90

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UBP has priced its planned P10 Billion stock rights issue (SRO).

Rights: 1 new share, for every 6.6644 common shs held. (-% below close)

In the first half of 2018, UnionBank reported total assets of P623 Billion

- that's US$ 11.6 Bn at 53.5. Net income rose to P4.7Bn, from P4.4Bn last year

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UnionBank is Most Innovative Bank of the Year 2018 ...

Apr 13, 2018 - UnionBank is Most Innovative Bank of the Year 2018 at Global ...

(Innovation showed up in UBP's growing stock price too)

UPB vs. BPI, BDO ... all-data :

0ZUAIyE.gif

/ 2 /

Asiamoney proclaims UnionBank as BEST DIGITAL BANK – 2017

UnionBank has definitely made an indelible mark as an industry leader in digital banking when Asiamoney awarded UnionBank as “Best Digital Bank – Philippines” at the recently concluded Asiamoney Banking Awards 2017 held last September 26 at The Ritz-Carlton in Beijing, China.

According to Euromoney.com, “It’s rare to find a lender that saw the potential in the digital world early – and got it right. Most countries boast at least one standout lender in this category; when it comes to the Philippines, that lender is UnionBank.”

UnionBank has always been quick to embrace innovation.
 
. . . For the past 10 years, the Bank has centralized most of its operations, including majority of its accounting processes.
 
When he assumed his position as UnionBank President and COO in 2016, Edwin R. Bautista said: “We are highly digitized in each of the products like credit cards, the only thing that is not automated is the physical handling of cash but even that we want to move to deposit taking machines.”

. . . UnionBank was the first to introduce the concept of using state-of-the-art face recognition technology instead of the usual passwords which are easily compromised.  For this, the Bank has been granted the patent to “Selfie Banking” and made EON known as the first Selfie Banking in Asia.

Chairman and CEO Justo A. Ortiz believes that in its 35 years of existence, the mission to “transform the bank for the digital economy” is the most revolutionary and gigantic step that the Bank has taken towards enabling its customers via digital transformation.
 
The “Best Digital Bank” award is yet another affirmation that UnionBank is well on its way to fulfilling its vision of reshaping the Bank into a “technology company with banking utilities”, and likewise, maintaining leadership in “Smart Banking” particularly in areas of innovation, customer delight and value-for-money through the creative application of expertise and dedication.

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Wow! This bank is also innovative, it is stock has done even better

"invest heavily in information technology, digitalization, people and branches"

P3 > P268 - that's almost 100X, actually 89x* (10x the UBP gain)

*But the jump in 2014 could be suspicious (reverse split maybe?)

Security Bank / SECB ... all data :

HTgDj6c.gif

Security Bank Focused on Digitalization After Posting Faster-than-Industry Loan, Deposit and Earnings Growth and Record Profits in 2017

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Top 9 Quoted banks viewed thru History (9 of Top 12)

Security Bank and Unionbank are two "outliers"

Top 3 PH banks ... fr. Aug.2008 : updated to may'20

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MBT + Innovator banks ... fr. 2008 :

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4 More Banks ... fr. 2008 :

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==

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Biggest bank, BDO, testing key support near P114

Is it about to "go Critical" if support does break

It may signal a possible stock market correction / & economic downturn?

BDO -Unibank/ ... All-data: 5yr: 2yr: 6mo : Last 9/12 : P 114.00

ZFRvLfb.gif

==

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Bank Update: Bad Loans Up, with Rising Rates... but banks still strong

MBT -vs. BDO, BPI ... update : about 1 year :

RATES, secondary market
  3 mos.: 4.643%
  6 mos.: 6.139%
12 mos.: 6.295%
"investors expect inflation to ease by next year... 4.3% vs. 5.2% this year"

Bad debts grew in August, but at a slower rate.
Up 8.4% from Aug,2017 to 112.9 billion in Aug,2018
NPL (non-performing loans) grew slower than the 17.9% increase in Loans from Big banks.
Sore loans fell in one year from 1.46% to 1.34%.
But past due loans grew a rapid 29.8% to P 159.7 B in August
Reserves for bad loans were up 13.1% to P161.3 Billion

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PHL-BigBanks: Since 2010: 2015: '18: '19: YTD /

5.26.20: BD0-85.90 : MBT:-33.20 : BPI-63.00 : SECB-77.10 / M/D-r: 38.6%, M/S-r: 43.1%

tuzdMOa.gif

: YTD / BD0-89.60 : MBT:-34.00 : BPI-62.30 / M/D-ratio: 37.9%

q2atSA8.gif

YE-2019=: - BDO- : - MBT- : - BPI- : -SECB : - UPB- :  Top3- : - PHL :
Deposits- : 2,485B : 1,714B : 1,728B: 499.6B: 484.3B: 5,927B: 13.1Tr :
MktShare: (19.0%) (13.1%) (13.2%): (3.81%) (3.69%) (45.2%) (100%)
Equity —  : 368.9B : 309.6B : 269.6B: 118.3B: 97.50B: 948.1B:
Dep.Lev. : (r6.74x)  (r5.54x) (r6.41x) (r4.22x) (r4.97x) (r6.25x)
CapAd.R :  12.7 % : 16.2%*:  15.2 % :  16.9%  :  13.2%  : 14.1 % : 14.6% :
Net Inter : 119.9B : 77.00B : 65.95B : 26.84B : 22.34B :
LoanAdv.: 2,485B : 1,831B : 1,728B : P512.B : 541.0B :
NetintMar: 4.82 % : 4.21 % :  3.82 % :  5.21 % : 4.13 % : 0.00 %:
Book.Val.: P32.62 : P68.83 : P59.81 : P157.0 : P80.07 :
YE-2019-:  158.00 : P66.30 : P87.90 : P180.3 : P57.70 :
% BookV. :  484.% :  96.3%  : 147.0% : 114.8% :  72.1% :
Total Inc. : 221.2B : P28.1B : P130.B : P10.1B: P14.0B :
Cost/Inc. :  73.2% :  54.6%  :  70.4%  :  75.8%  :  72.5% :
Earns/sh. : P10.01:  P 6.24 :  P 6.39 : P13.40 : P11.52 :
Ret.on BV : 30.7% :  9.07%  :  10.7%  :   8.54% :  14.4% :
Int.Margin: 00.0% :  0.00%  :  00.0%  :  3.90% :  0.00% : 0.00% : 3.40% : Reported
ROEquity :  00.0% :  0.00%  :  00.0%  :  8.80% :  0.00% : 0.00% : 10.7% : Reported
Inv.Gr.-M. : XXXX  :   Baa2  :  XXXX   :   Baa2  :
======
*Based on SECB’s figures.  MBT self-reports CAR at 17.5%

YE-2015=: - BDO- : - MBT- : - BPI- : - Top3- : - PHL : Pct.: M/D-r:
Deposits- : 1,679B : 1,258B : 1,123B : 4,060B : 9.74Tr :
MktShare : (17.2%)  (12.9%)  (11.5%): (41.7%) (100%)
Equity —  : 199.0B : 193.8B : 150.3B : 543.1B :
Dep.Lev.  : (r8.44) : (r6.49) : (r7.47) : (r7.48) :
Book.Val. :  P17.51 : P60.93 : P38.25 :
YE-2015-: 100.33 :  P68.11 : P81.54 :
% BookV. : 573.% :  111.8% :  213.% :
Earns/sh. : P 6.74 :  P 5.70 :  P 4.64 :
Ret.on BV : 38.5% :  9.35% :  12.1% :
=======

Hmm. BDO is far more profitable than MBT! Hence the higher multiple

 As of Mar. 31, 2020, 48.2% (Dec. 2019, 48.8%) of the company is publicly owned, where 37.2% (36.6% at Dec.2019) belong to GT Capital Holdings, Inc., and 14.6% (14.5%) to the Ty family and other related parties.: (100% - 37.2% - 14.6% = 48.2%)

1. Philippines’s Metrobank to Raise Over $700 Million Via Rights Issue

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MBT : all-Log : All: 10yr: 5yr:

hxk3hC4.gif

metrobank stocks forecast
source: markets.ft

At the beginning of last year (2015?), MBT issued 700 million stock rights to its shareholders for major business expansion. That project would contribute to its income boost in the future.

> https://dailypik.com/mbt-stocks-forecast-and-how-we-earned-money-from-the-stocks/

MBT has been on the Undervalued List of DailyPik ...'

We update our picks daily, every trading day.

Note: Stock Prices change every millisecond so check your watchlist

> Fantastic 5: https://dailypik.com/stocks-picks/

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Top three PH Banks +1, Statistical Profile /

=========  :  - BDO -  :  - MBT - :   - BPI - : - SECB  :  Total - : US$ at 50.5
Price End'19:  P158.00 : P 66.30 :  P 87.90 : P195.0 :
Last Price -  :   P 86.05 : P 33.30 :  P 60.10 : P 77.40 :
YearTo Date :   - 45.5% :  - 62.1% :  - 31.6%  : - 60.3% :
Shares O/S- :   4.38 Bn :  4.50 Bn :  4.51 Bn : 753.5M :
MktCap Php :   P 377 B : P 310 B :  P 271 B : P 58.3M: P1000 B : $ 31.9 Bn :
BookVal.Eqty    P 369 B : P 150 B : P 270 B : P118.3M: P 000. B : $ 15.3 Bn :
Mkt to Book :    102.2 % : 48.39% :  100.4 % :  49.30% :
Dividend pmt :   P 1.20 :    P1.00   :   P 1.80   :  P 3.00 :
Yield / Last.    : : 1.39% : :  3.00 % : :  2.99 %  :   3.88 % :
Assets, YE’19 : P3,010B : P2,451B : P2,205B : 793.0B : $1000B,
Loans,  YE’19 : P2,574B : P1,831B : P1,728B :  515.1B : $1000B
Growth, 2019 :  + 3.7 %  :  + 6.0 %  :  + 6.1 %  : + 5.3 % :
Net Interest.   :   119.9B :   77.00B :  65.95B : 26.84B : 000.0B :
Loans & Adv.  :  2,485B :   1,831B :    1,728B : P512.B : 0,000B :
Net Int Marg. :  :  4.82% : : 4.21 % : :  3.82 % :  5.21 % : 4.13 % : 0.00 %:
Income -------  :  44.19B :  28.06B :   28.80B :  10.10B :
Chg.vs 2018-- :  + 35 % :  + 27 %  :  + 25 %   :  + 17%  :
Group Owned ::  38.2%+ : : 36.4% : :  48.2% : (from 2018) Sy family also owns BDO Pfd.
========

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BANK financial model & Big picture comments

I started nibbling at bank shares today, buying a small number of shares in MBT & SECB

I imagine this... 
By purchasing bank stocks at a 50% DISCOUNT to NAV and a 3% or higher dividend yield, at least half,  and maybe far more, of my returns will come from CAPITAL GAINS, and when I see a 10% -20% capital gain return in under 1 year. I will probably grab it, selling at least a portion of my bank shares

I call UBP & SECB the "two innovator" banks, and I think there is good room for a disruptor bank to gain market share fast.  The VERY HEAVY reliance on bricks & mortar branches does not seem to be a winning strategy in the long run imho.  As you walk around Makati, you see far too many bank branches - these must be expensive & inefficient to operate, and .  US & european banks have tackled this type of inefficiency years ago.  Unless rents drop, banks in PHL may want to find a cheaper way to attract deposits, like paying online depositors a higher interest rate. 

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SECB / Security Bank

0YtoEAE.gif

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> Unless rents drop, banks in PHL may want to find a cheaper way to attract deposits, like paying online depositors a higher interest rate. 

Yes, and it started already. ING Philippines & Octo (CIMB) currently offer around 4% to their online depositors, and a third one (Singapore-based Tonik) should start business in Philippines soon. I use ING for few months already and I find it very convenient. 4% is the current promotion, it should be lowered to 2.5% few months from now but it is still very competitive and more flexible than time deposits.

I wonder what is the size of the deposits they were already able to attract? It is probably only a small share of the market but it will grow in the coming years. I agree with you Dr Bubb, bricks & mortar branches are not the future. The young generation prefers digital wallets and online deposits.

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INDEX CHANGES are impacting bank share prices. esp. SECB & EW

below MSCI index review results:

Standard
Add: PGOLD
Delete: SECB

SECB & EW vs. PSEI... 3mo :

AIllZPI.gif

Small cap
Add: DMC HOME SECB
Delete: EW MAC MWIDE

Changes will take effect on the close of May 29.

====

Three PH Banks  below 50% Book Value, Statistical Profile /

=========  :  - MBT - :   - BPI - : - SECB  :  Total - : US$ at 50.5
Price End'19:  P 66.30 :  P 87.90 : P195.0 :
Last Price -  :  P 33.30 :  P 60.10 : P 77.40 :
YearTo Date :   - 62.1% :  - 31.6%  : - 60.3% :
Shares O/S- :   4.50 Bn :  4.51 Bn : 753.5M :
MktCap Php :   P 310 B :  P 271 B : P 58.3M: P1000 B : $ 31.9 Bn :
BookVal.Eqty   P 150 B : P 270 B : P118.3M: P 000. B : $ 15.3 Bn :
Mkt to Book :    48.39% :  100.4 % :  49.30% :
Dividend pmt :   P 1.00  :   P 1.80   :  P 3.00 :
Yield / Last.    : : 3.00 % : :  2.99 %  :   3.88 % :
Assets, YE’19 : P2,451B : P2,205B : 793.0B : $1000B,
Loans,  YE’19 : P1,831B : P1,728B :  515.1B : $1000B
Growth, 2019 :  + 6.0 %  :  + 6.1 %  : + 5.3 % :
Net Interest.   :   77.00B :  65.95B : 26.84B : 000.0B :
Loans & Adv.  :  1,831B  :    1,728B : P512.B : 0,000B :
Net Int Marg. :  :  4.21 % : :  3.82 % :  5.21 % : 4.13 % : 0.00 %:
Income -------  :  28.06B :   28.80B :  10.10B :
Chg.vs 2018-- :  + 35 % :  + 27 %  :  + 25 %   :  + 17%  :
Group Owned :: 36.4% : :  48.2% :  ? N/A. ?
==========

PH: EW / east west bank... all data: xx / Last:  6.25 - support at 6.00 or lower?

T2EF3WG.gif

PH: CHIB / CHINA Banking Corp... all data: xx / Last:  18.90

CHIB: PER: 4.87, (= Earnings Y= 20.5%) Div Yield: 4.66%: P0.88 on 18.90
BookValue: is Php 35.80 per share. So 52.8% of BV

Juw5ARN.gif

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#6: China Bank was the country’s sixth-largest bank based on assets, loans, and deposits.

CHIB: PER: 4.87, (= Earnings Y= 20.5%) Div Yield: 4.66%: P0.88 on 18.90
BookValue: is Php 35.80 per share. So 52.8% of BV ... ALL Data: 5yr:

n7iCKiV.gif

China Bank’s core banking franchise is anchored mainly on its 100-year history in the Philippines. The bank has successfully managed to ride out various phases of the economic cycle, including the Great Depression in 1931 and the Asian Financial Crisis in 1997. Albeit China Bank has shown resilience against past global and domestic crises, the impact of the ongoing COVID-19 pandemic, however, is expected to be more severe. It is too early, however, to determine the full extent of such impact, globally and in the Philippines, as efforts to contain COVID-19 continue to significantly lag behind the disease’s rapid spread. In the short-term, however, China Bank is expected to keep its sound credit profile due to its core strengths. These strengths are seen to provide support to the bank against the immediate impact of the pandemic. Going forward, the same strengths are also viewed as hastening China Bank’s recovery from the negative impact of the pandemic, in the medium to long-term. It is to be noted, however, that such recovery is also very much dependent on how the Philippine economy, as a whole, is able to weather the COVID-19 contagion. SM Investments Corporation (SMIC) owned 22.6% of China Bank, as of March 31, 2020. As part of the SMIC banking group, the Sy Family is considered to exercise significant influence on China Bank’s strategy, goal setting, high-level policy making, and appointment of senior staff. SMIC is one of the largest Philippine conglomerates and the holding company of the SM Group, with interests in Retail, Property, and Banking.

"China Bank Receives Highest Credit Rating" China Banking Corporation (China Bank), one of the country’s leading private universal banks (unibanks) with a strong franchise in the Chinese-Filipino market, received an issuer rating of PRS Aaa (corp.) from Philippine Rating Services Corporation (PhilRatings). The rating has a Stable outlook. As of December 31, 2019, China Bank was the country’s sixth-largest bank based on assets, loans, and deposits. The bank had 631 branches and 1,002 ATMs, as of end-2019. An issuer rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations within a time horizon of one year. The focus is on financial strength and stability under normal and stressed conditions to be able to meet existing and prospective financial obligations. A company rated PRS Aaa (corp.) has a very strong capacity to meet its financial commitments relative to that of other Philippine corporates. A PRS Aaa (corp.) is the highest corporate credit rating assigned on the PRS scale. A Stable Outlook..

===

CHIB & PNB were downgraded by Fitch last week - it was reported

Fitch downgrades PH outlook » Manila Bulletin Business

May 8, 2020 -

From “positive,” Fitch Ratings lowered its outlook for the country to “stable,” but at the same time kept Manila’s credit rating at “BBB,” which is a notch above the minimum investment grade.

A “stable” outlook indicates that the Philippines’ rating will likely be maintained over the next 18 months to 24 months.

The pandemic has resulted in a wave of unfavorable credit rating actions worldwide. For the first four months of this year, Fitch has downgraded the rating of 21 sovereigns and assigned negative outlook to the rating of 25 countries out of 119 countries that it rates.

In response to Fitch’s latest assessment of the Philippines, the country’s top economic officials acknowledged that the Philippines, just like many countries across the globe, is confronted with one of the most difficult challenges to mankind in recent history. They, however, stressed that the country was in a strong position going into this crisis and has built buffers that are helping mitigate the impact on the economy.

/ 2 /

Fitch Revises China Banking Corporation Outlook to Negative ...

May 12, 2020 -

MANILA, Philippines — Fitch Ratings has taken negative ratings action on state-run Land Bank of the Philippines and Development Bank of the Philippines (DBP) as well as privately-owned China Banking Corp. and Philippine National Bank (PNB) as the coronavirus disease 2019 or COVID-19 outbreak is expected to take its toll on the economy and the banking sector’s operating environment.

The debt watcher revised the credit outlook for Landbank and DBP to stable from positive, but affirmed the rating at BBB to mirror the revision in the sovereign rating outlook of the Philippines.

Likewise, the credit outlook of China Bank was revised to negative from stable, but its rating was maintained at BB+ as the deteriorating operating environment due to the pandemic would weigh significantly on the bank’s asset quality and profitability over the next few years.

(Notes from 2019 Fitch rating summary):
12,2% Tier1 Cap - not so high..  Rapid growth, and lower "systemic importanvce" compare to the Big three seem like negatives
/ 3 /
BIG SME EXPOSURE?
It is possible that Fitch was concerned about CHIB's exposure & focus on the SME sector...

The Plantersbank deal was first introduced to China Bank on May 21, 2013 by Investment & Capital Corporation of the Philippines (ICCP), the exclusive adviser to Plantersbank in the transaction. The Memorandum of Agreement was signed on September 18, 2013.[13] The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) gave its approval-in-principle of Planterbank's merger with either China Bank or CBS on December 13, 2013, and on December 18, 2013, the Share Purchase Agreement was signed. China Bank settled P1.579 billion for the 84.77% capital stock owned by the Tambunting family and related parties and the Dutch development bank FMO on January 15, 2014. On the same date, the new members of the Plantersbank board were elected, and officers of China Bank and CBS were appointed to various board/management committees of Plantersbank.[14] Integration activities have commenced and China Bank is preparing for the tender offer to the minority shareholders of the remaining 15.23% Plantersbank stock.

Plantersbank is a good strategic fit with China Bank as both banks share the same strong commitment to SME finance. The acquisition bolsters China Bank's current strategy in two areas: growing its middle market/SME portfolio and accelerating its network expansion program

> More / Wiki: https://en.wikipedia.org/wiki/Chinabank

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MORE from FITCH

See CHIB DETAIL: > https://www.fitchratings.com/research/banks/fitch-revises-china-banking-corporation-outlook-to-negative-on-coronavirus-affirms-idr-at-bb-12-05-2020

Fitch has revised the outlook on CBC's asset quality mid-point to negative, to reflect potential deterioration stemming from the outbreak and its economic fallout. CBC enters the crisis with stronger asset quality than the system average, as reflected in its non-performing loan (NPL) ratio of 1.5% at end-2019 (system: 2.1%). The bank's SME loan mix of around 5% is broadly comparable with that of the system, a segment which is likely to face greater pressure in the current environment. We expect loan delinquencies to rise, while regulatory reliefs and its steady underwriting standards should cushion in part the deterioration in the near term.

CBC's average operating profit over risk-weighted assets (RWA) ratio of 1.7% over 2014-2019 was broadly comparable with its local peers' average of 1.8%. As with other banks, we expect profitability headwinds to rise amid the aggressive monetary easing, lower client activity and higher credit costs as loans sour in the near term. Against this backdrop, we have lowered the bank's earnings and profitability mid-point to 'bb' with a negative outlook.

We believe that CBC has moderate - albeit lower than average - capital buffers to withstand moderate credit stress in the system, as reflected in its common equity Tier 1 ratio of 12.8% at end-2019. Notwithstanding this, we have lowered the bank's capitalisation and leverage mid-point to 'bb' as its current ratio is no longer commensurate with a 'bbb-' rating as per Fitch's criteria - given the revised operating environment mid-point into 'bb' category.

On the other hand, Fitch downgraded the rating of PNB to BB from BB+ as the economic fallout of the health crisis would weigh significantly on the listed bank’s credit profile in the near and medium term.

“We expect the sharp slowdown to weaken business conditions, stress credit portfolios, and weigh on profitability at least over the next year. This is exerting downward pressure on the banks’ standalone credit profiles, though the rating impact varies according to the existing rating levels relative to perceived vulnerabilities,” Fitch said.

It said the financial impact of the Luzon-wide enhanced community quarantine is acute, and a significant fall in demand and revenues could not be plugged by cheaper financing.

 “The rapid loan growth of recent years, especially in the more vulnerable consumer and small and medium enterprises segments, will be put to the test. For the state-owned banks, intensifying pressure to lend on non-commercial terms also points to potentially higher risk appetites and higher asset-quality risks. As such, we have downgraded our assessment of asset quality for most banks by a notch and with a negative outlook,” Fitch said.

Meanwhile, Fitch affirmed its BBB- rating and stable outlook on the country’s biggest lenders including BDO Unibank, Metropolitan Bank & Trust Co. and Bank of the Philippine Islands (BPI).

> source: https://www.philstar.com/business/2020/05/13/2013554/fitch-downgrades-4-philippine-banks

Fitch sees CHIB as a better risk at BB+ than PNB at BB - but not hugely better

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BANK UPDATE & Comment on SECB

BPI tends to correlate best with PSEI (among the banks)

BPI vs-PSEI & others ... since Aug.2017: Jan.2019 - Last: 73.50 / 6476 = 1.13%

FGrBZSp.gif

==

SECB has been a laggard in the weak banking sector. I bought it on the low and sold it at a profit already.

My opinion is the Hope rally is running out of steam. based on my reading of the charts.  

Like in the property market,  we still do not know the full extent of damage wrought on the banking sector by Covid. Be careful. 

/ 2 /

I am more of a short term trader in PHL stocks than many perhaps. and maybe too eager to lock in my gains.   You could argue that the upgrade in the BSP credit rating in Japan from BBB+ toA- ... might actually help the banks here.  There are always two sides to a market. haha

 

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INSIDER LOAN TROUBLES ... for.. ?

Rumor has it, the bank in question in ChinaBank

What's going on here?

posted June 12, 2020

What's this we hear that one of top private universal banks in the country is in trouble because it has defaulted on a multi-billion loan exposure.  The bank is said to be part of a reputable investment firm with diversified exposure in the banking, property and retail sectors. The lending institution is rumored to be under investigation for self-dealing transactions, or DOSRI, which stands for “directors, officers, stockholders, and related interests.”

Per Bangko Sentral ng Pilipinas (BSP) regulations, the threshold for “related interest” is 20 percent equity, which amounts to control over the entity.

... According to the grapevine, an entrepreneur engaged in town mall development and had a falling-out with an investment firm has filed a complaint with the Monetary Board to investigate the top officials of the bank over PhP4 billion worth of unreported and illegal DOSRI loans.

The complainant invoked the newly minted Citizen’s Charter adopted by the Monetary Board last year that vowed to take action on a complaint within five days. The complaint will be a litmus test of the resolve of the Monetary Board to uphold the Citizen’s Charter and rid the banking industry of recalcitrant bank directors and officers.

The investment firm is believed to have obtained a majority equity in the complainant’s firm through corporate layering and an offshore corporation not registered to do business in the Philippines on a pledge of access to credit from the bank where the investment firm appears to have a 20 percent equity.

With the merger, top officials of the bank and the investment firm involved themselves in the management and operations of the complainant’s firm.

A director of the bank is said to have approved the disbursement vouchers of the borrower-firm while another director of both the bank and the investment firm is a co-signatory in time deposits.

The complaint now in the desk of the Monetary Board is believed to be much bigger than its previous DOSRI investigation of a now-defunct bank.

The DOSRI investigation, once it pushes through, will test the Monetary Board's drive to rid the banking industry of scalawags.

> More: https://manilastandard.net/mobile/article/325863

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"CHEAP" BANK Update

Banks ... YtD:

CqiH89M.gif

MBT  / Metrobank ... All: xx / last: P 34.90, Yr.L: 32.90

1pgOurs.gif

SECB / Security Bank ... All: xx / last: P 88.50, Yr.L: 77.00

52mglgE.gif

CHIB / Metrobank ... All: xx / last: P 20.05, Yr.L: 17.00

qiZu6tq.gif

Three PH Banks near 50% Book Value, compared with BPI

=========  :  - BPI -  :  - MBT - : - SECB   : - CHIB- :
Price End'19: P 87.90 : P 66.30 :   P195.0 : P 25.05 :
Last Price -  : P 65.50 : P 34.90 :  P 88.50 : P 20.05 :
YearTo Date : - 25.5% :  - 47.4% :  - 54.6% :  - 20.0% :
Shares O/S- :  4.51 Bn : 4.50 Bn :  753.5M : 2.69 Bn :
Book Value- :  P 59.81 : P68.83 : P156.97 : P 35.80 :
Mkt to Book:  109.5% : 50.70% : 56.38% :  56.00% :
Dividend pmt:   P 1.80  : P 1.00  :   P 3.00  :  P 0.88  :
Yield / Last.   : : 2.75 % :  2.87 % :   3.39 % :  4.38 %  :
Earning / sh.  :  P 6.39  :  P 6.24  :  P13.40 :  P 3.75  :
PE Ratio ——  :  R-10.4  : R- 6.50 :  R- 6.29 :  R- 6.68 :
Div.as% Earns:  28.2 % :  16.0 % :   22.4 % :  23.5 % :
Chg.vs 2018- :  + 25%  : + 13 % :  + 17 %  :   + 24%  :
===========

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