February 10, 2014

BDO expands assets to P1.6t in 2013

BDO Unibank’s (BDO, Buy) yesterday published its statement of condition which show assets expanding 31% YoY to P1.6t in2013 and loans growing by 18% to P896b.The bankalso raised its deposits with BSP (i.e. due from BSP)by 145% YoY to P384b. This surge in assets was funded by a commensurate increase in depositsthat surged 41% to P1.3t. BDO also disclosed that its2013earnings translated to RoE of 15.3%. Further, the bank’s NPL ratio remained low at 1.87% while its Tier 1 CAR of 14.6% remained comfortably above regulatory requirements.

Our Take: Although BDO’s loan growth was largely inline with our forecasts, its asset growth has exceeded our expectations on the back of the surge in the bank’s deposits with BSP. Thiscan imply thatBDO has started to lever its balance sheet, preparing to deploy this cash hoard into higher interest-earning assets in the earlier part of the year. Further, BDO’s2013RoE comes ahead of consensus estimates of ~13.0%.– WealthSec