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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, because it is large, and owned by Ayala. 

But now I think it may be more complicated, and three big banks are all clustered at the top

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

Top Three: BDO, BPI, MTB  10yr : 5yr : 2yr, since Aug-'16 : 6mo / 10d : 127.10, 92.55, 176.57

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Top Three banks / since Aug-'16 : 6mo / 10d :

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MTB versus Two "successful innovators": UBP & SECB ... update : img :

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Other Top 12 banks ... update :

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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 -  : - MTB -  : - BPI -  : Total - : US$ at 53.5
Price End'17:       P164.00 : P170.99 : P108.10 :
Share Price- :        P127.10 : P176.57 : P 99.55 :
YearTo Date :         - 22.5% :  + 3.26% :  - 7.91% :
Shares O/S- :         4.37 Bn :  3.98 Bn :  4.50 Bn :
MktCpPhp,B :        P 555 B : P 703 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 % :  252.3 % :  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

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> source : 1H-2018 MTB Investor presentation

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GTCap, largest owner of Metrobank shares, looks deeply undervalued

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GTCap vs. MTB, 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
MTB -- : Metrobank-- : 3.98 Bn : 176.3 : 702 Bn : 36.36% : P 255.1B :
MPI -- : MetroPacific : 31.5 Bn : P5.02 : 158 Bn : 15.55% : P 024.6B :
====== : Public Co's-: ============: 279.7B : ====== : P 279.7B : + 61.4%
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.

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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 :

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/ 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 :

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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. 2008 :

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MTB + 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

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==

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