BDO: 3Q26 earnings +2% YoY, loan growth outperforms

From AB Capital's The Opening Bell: Three Moves

Event

BDO's 3Q26 net income reached P22.9 billion, +2% YoY and +11% QoQ, taking 9M26 net income to P63.6 billion, +1% YoY. This is generally in-line with expectations as it already accounts for 74% of the street's and 72% of AB Cap's FY26E, respectively. PPOP growth was quite resilient at 7% YoY and 4% QoQ, mainly driven by strong NII contribution, which offset weaker non-II revenues (i.e. likely flat fee generation and still soft trading/FX).

View

Loans rose 16% YoY to P4.1 trillion, accelerating from 15% in 2Q26 and outperforming industry growth of 11%. We view this as evidence of resilient origination across segments, supporting revenue visibility, although 11% deposit growth and 5% CASA expansion warrant monitoring as funding demand rises.

Catalyst

Asset quality remains resilient, with the NPL ratio steady at 1.6% QoQ from approximately 1.8% a year ago and coverage at 132%. However, faster loan growth can flatter the headline ratio. We believe credit cost trends and funding repricing will determine whether PPOP growth translates into stronger earnings.

Action

BDO's CET1 fell to 12.6% from 13.1% in 2Q26 and 14.4% a year earlier, despite book value per share rising 6%. We would maintain a measured stance until credit costs become clearer and internal capital generation better supports sustained double-digit loan growth.

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.