Investors take profit on BPI earnings but lender’s price remains unchanged

BANK OF THE PHILIPPINE ISLANDS (BPI) saw short-term profit-taking last week with the release of its second-quarter earnings, analysts said, but closed at the same price.

Data from the Philippine Stock Exchange (PSE) showed a total of P997.20 million worth of 8.65 million shares were traded from July 17 to 21, making it the fourth most actively traded stock on Friday.

BPI’s share price was unchanged week on week at P115 last Friday. For the year, however, the stock went up by 12.7%.

Analysts said BPI’s stock had been performing in an “upward” trend since mid-June and investors were cashing in on its profit either due to the positive trajectory or due to Fed hike fears.

In a Viber message, Globalinks Securities and Stocks, Inc. Head of Electronic Trading Mark V. Santarina said that the earnings report last week pushed the stock to return to its closing price last week.

“The selling activity observed among some investors can be attributed to short-term profit-taking,” he added.

In an e-mail, Cristina S. Ulang, research head at First Metro Investment Corp., noted the market’s stance could be attributed to the upcoming Federal Open Market Committee meeting this week.

The widely expected rate hike this week by the US Federal Reserve might also be the last rate hike the Fed plans to take, former Fed chairman Ben S. Bernanke said.

Last Thursday, BPI announced its first-semester net income at P25.1 billion, up by 23%. On a quarterly basis, net income reached P13 billion, up 4.5% year on year.

Total revenues also went up by 13.8% to P65.6 billion.

Ms. Ulang said the bank’s earnings were “just in line” with investors’ expectations, adding that the market will probably monitor whether the bank can maintain its earnings growth and return on equity leadership in the next months.

“Top banks have been displaying strong performance in recent months, and this trend is expected to persist due to favorable market conditions for the banking sector. Given its robust standing as the third-largest bank in the country, investors likely foresaw this positive report from BPI,” Mr. Santarina said.

He placed his third- and fourth-quarter net income forecast for BPI at P12.972 billion and P13.4 billion, respectively.

For the year, he placed his net income forecast at P48.4 billion.

Analysts are expecting the bank to sustain its growth and to “rise in sync” with the market and other banks this year after it was backed by its strong financial performance.

“Its total assets have impressively grown by 8.9%, reaching P2.7 trillion, while total deposits expanded by 7.6% to P2.1 trillion, mainly driven by increased contributions from current and savings accounts. Over the short term, there is a possibility that the stock will consolidate within the range of 112 to 115,” Mr. Santarina said.

Ms. UIang said the bank’s investment in tech can continue to sustain its growth for the rest of the year.

For the week, she placed BPI’s support and resistance levels at P100 to P115.

While Globalink’s Mr. Santarina gave his support and resistance levels for the bank at P111 and P118, respectively.

He added that the local bourse remains attractively valued compared with other neighboring markets, attracting more foreign investments and could lead to a promising outlook for BPI’s performance and instilling investor confidence in the bank’s continued growth. — Bernadette Therese M. Gadon with Bloomberg