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

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

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

Other Top 12 banks ... update :

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

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

A strong first half for Metrobank, relatively speaking

PH Bank stocks trade at a nice premium to Book Valuations

> source : 1H-2018 MTB Investor presentation

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GTCap, largest owner of Metrobank shares, looks deeply undervalued

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

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.

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

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

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 ...

https://www.pressreader.com/philippines/business-world/20180413/282406989932305

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 :

/ 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 :

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

April 24, 2018

24 April 2018, Makati, Philippines – During the annual stockholders’ meeting of Security Bank Corporation (PSE: SECB) on Tuesday, 24 April 2018, the following were elected to the Security Bank Board: incumbent directors Diana P. Aguilar, Philip T. Ang (independent), Anastasia Y. Dy, Frederick Y. Dy, Takayoshi Futae, Joseph R. Higdon (independent), James JK Hung (independent), Ramon R. Jimenez, Jr. (independent), Jikyeong Kang (independent), Napoleon L. Nazareno (independent), Takahiro Onishi, Alfonso L. Salcedo, Jr., Rafael F. Simpao, Jr. and Alberto S. Villarosa, and new director Cirilo P. Noel. During the organizational Board meeting, key appointments were for Frederick Y. Dy as Chairman Emeritus, Alberto S. Villarosa as Chairman, Anastasia Y. Dy as Vice Chairman, and Alfonso L. Salcedo, Jr. as President and Chief Executive Officer.

In his report on 2017 operations, President and CEO Mr. Alfonso L. Salcedo, Jr. highlighted Security Bank’s 20% earnings growth that resulted in a record-high net income of Php 10.26 billion, versus industry’s 7% earnings growth. In the last five years, Security Bank’s net income grew by a compounded annual growth rate of 20% versus industry’s 3%. The Bank’s revenue growth in 2017 was 20% versus industry’s 11%. Net interest income growth was 22% versus industry’s 17%, while non-interest income growth was 15% versus industry’s 5% decrease. The Bank’s return on shareholders’ equity was 10.2% versus industry’s 9.96%. The Bank’s Core Equity Tier 1 and Total Capital Adequacy ratios of 15.5% and 17.7%, respectively, are among the highest in the industry and well above the minimum regulatory requirements. Total assets grew 9% to Php 757 billion. In the past five years, Security Bank’s total assets grew by a compounded annual growth rate of 21%, versus industry’s 11%.

Also highlighted was Security Bank’s healthy loan portfolio growth of 28% versus industry’s 19%. The Bank’s loan growth was driven by corporate loans which increased 25%, middle market loans which grew 24%, and consumer loans which expanded 49%. In the past five years, Security Bank’s loan portfolio grew by a compounded annual growth rate of 22% versus industry’s 18%. The Bank’s three customer segments grew by compounded annual growth rates of 18% for corporate loans, 20% for middle market loans, and 63% for retail loans. Retail loans as a percent of total loans increased to 16% at year-end 2017 from 13% in 2016. Security Bank now has a full slate of consumer loan products consisting of home, auto, credit card, personal and small business loans. Asset quality remained healthy with net non-performing loan ratio at 0.02%, a decrease from 0.17% in 2016, and lower than industry’s 0.47%. NPL cover increased to 239%, versus industry’s 150%. Deposit growth was 19%, faster than industry’s 12%. In the last five years, Security Bank’s deposits grew by a compounded annual growth rate of 19% versus industry’s 12%. The Bank added 12 new branches in 2017, bringing its network to 302 branches. Its ATM network has grown from 622 to 713.

===

DIGITAL BANKING  2018: Overview & main challenges : https://www.finastra.com/sites/default/files/documents/2018/03/product-insight_digital-banking-overview-in-the-philippines.pdf

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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 :

MTB + Innovator banks ... fr. 2008 :

4 More Banks ... fr. 2008 :

==

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

MTB -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