BPI 3Q26/9M26: In-line, loan growth recovery offset by still elevated provisions

From AB Capital's The Opening Bell: Three Moves

Event

BPI's 3Q26 net income declined 8% YoY (+1% QoQ) to P16.1 billion, taking 9M26 total to P48.9 billion, down 3% YoY. This is in line with expectations as it accounted for 74% of street's and AB Cap's FY26E. Despite PPOP growth accelerating in 3Q26, the drag mainly came from still elevated provisions.

View

Loans grew 14% YoY, led by SMEs (+46.7%) and cards (+27.2%), while NIM improved 2bp QoQ to 4.72%. However, the higher-yielding loan mix also warrants closer monitoring of credit normalization as household finances remain pressured.

Catalyst

Despite declining 16% QoQ, provisions were still 46% higher YoY, while NPLs increased to 2.5% from 2.4% and coverage eased to 90%. We think continued NPL formation could delay earnings recovery, particularly as opex is still outpacing revenue growth.

Action

BPI's improving PPOP momentum provides some earnings support, but the investment case increasingly hinges on credit cost normalization. We would maintain our NEUTRAL rating until NPL formation moderates and coverage stabilizes. Analysts' briefing is on 27 Oct at 4PM.

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.