April 13, 2014

BPI’s lending portfolio grows in 1Q14

The Philippine Daily Inquirer quoted officials of Bank of the Philippine Islands (BPI, Buy) as saying the bank’s loan growth has been particularly strong in 1Q14. Corporate loans have grown faster than the 22% growth target this year. Meanwhile, auto lending from BPI’s subsidiary, BPI Family Bank, grew by 40% YoY while middle market loans grew by 30% YoY.

Our take: Faster corporate lending growth bodes well for the bank as corporate loans account for a substantial portion of BPI’s total loan portfolio. Moreover, strong growth across all segments signals that the bank is actively deploying funds from its recent stock right issuances.

Faster loan growth, coupled with BPI’s ability to re-price most of its existing loans, should bode well for core earnings growth that can help compensate for possibly lower trading gains. - WealthSec