BPI PS building durable ROE in a normalized banking cycle
From AB Capital's The Opening Bell: Three Moves
Event
We attended BPI’s 4Q25 briefing; key takeaway is the validation of management’s shift toward retail/MSME lending i.e. incremental risk-adjusted returns (loans ROA now 3.2% vs 3.1% in 2023) remain compelling despite higher credit costs.
View
Loan growth guidance is 12-13%, driven by non-insti, while institutional growth remains moderate at 8-9%, which we think reflects cautious macro assumptions. Net interest margins are expected to be stable on favorable loan mix and funding optimization.
Catalyst
Opex growth expected at 10%, but efficiency gains from vendor transitions and digital scale to moderate cost pressures over time. Credit costs are expected to normalize to ~80bps given tighter underwriting and improved portfolio seasoning.
Action
Maintain O/P rating given improving ROE durability supported by better loan mix, strong digital execution, and proactive balance sheet management. We view risk-reward as attractive given consistent execution and improving earnings quality.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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