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Fundamental View
AS OF 20 Aug 2025F1Q26 Non-Financial Services results reflected robust motorcycle sales and record segment profitability, offset by a sharp downturn in automobile earnings due to tariffs, one-time EV-related expenses, and regional sales declines in Asia and Japan. Management is pursuing active mitigation of tariff impacts through localization, production reallocation, and pricing, while maintaining strong cash generation and shareholder returns. Management lowered its projected FY26 tariff cost estimate by nearly one-third, improving its projected FY26 consolidated operating margin compression from 310 bp previously to 230 bp. While the projected FY26 consolidated operating margin of 3.3% remains low, improvement from its previous forecast and lower tariff impact could alleviate negative rating pressure.
Business Description
AS OF 20 Aug 2025- Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services.
- American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Non-controlling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). Honda Motor Co. (HMC) maintains Keep Well (support) agreements with its North American finance subsidiaries, AHFC and HCFI. Under the Keep Well agreements, HMC agrees to (1) maintain at least 80% ownership in AHFC and HCFI, (2) ensure AHFC and HCFI maintain a positive net worth, and (3) ensure both AHFC and HCFI have sufficient liquidity to meet their debt payment obligations.
Risk & Catalysts
AS OF 20 Aug 2025Management maintained its FY26 wholesale unit volume guidance that includes higher motorcycle wholesales and lower wholesales of Automobiles (-3%) and Power Products (-1%). The changes in Motorcycle segment (higher) and Automobile segment (lower) wholesales are expected to be primarily driven by Asia. Automobile wholesales in North America are projected to increase 2% YoY and account for 46% of the company’s global wholesales.
Management raised its FY26 consolidated operating profit forecast from ¥500 bn to ¥700 bn. The increase is equivalent to reduction in projected tariff impacts from to ¥650 bn to ¥450 bn. The revised forecast also includes higher currency tailwinds that are expected to be offset by unfavorable sales and price/cost impacts. While the revised forecast is a material improvement from last quarter’s forecast, it still represents a 42% decline from FY25 operating profit of ¥1.3 tn, mostly attributable to the company’s projected to ¥450 bn tariff cost. Finally, the updated forecast calls for Honda’s consolidated operating profit margin to decline by 230 bp from 5.6% in FY25 to 3.3%, an improvement from the 310 bp margin compression it previously expected.
Key Metric
AS OF 20 Aug 2025| $ mn | FY22 | FY23 | FY24 | FY25 | F1Q26 |
|---|---|---|---|---|---|
| Total Company Earning Assets | 71,105 | 65,363 | 74,626 | 83,112 | 86,066 |
| Cash and Investments | 2,607 | 1,544 | 1,670 | 4,052 | 2,728 |
| Excess Liquidity | 9,607 | 8,544 | 8,670 | 11,052 | 9,728 |
| Unsecured Debt | 38,026 | 33,410 | 41,566 | 48,363 | 50,725 |
| Secured Debt | 8,888 | 6,927 | 9,351 | 12,384 | 12,700 |
| Total Debt | 46,914 | 40,337 | 50,917 | 60,747 | 63,425 |
| Allowance % Retail Rece. | 0.58% | 0.71% | 0.80% | 0.80% | 0.86% |
| Allowance / Net Charge-offs | 3.75x | 2.41x | 1.72x | 1.48x | 1.45x |
| Net Charge-offs % Avg. Receivable | 0.15% | 0.29% | 0.52% | 0.57% | 0.60% |
| 30+ Day Delinquency Rate | 1.1% | 1.2% | 1.2% | 1.4% | 1.5% |
CreditSight View Comment
AS OF 15 Sep 2025We reiterate our Underperform recommendation on Honda Motor Co. and American Honda Finance Corporation notes based on relative value and its weak but improving consolidated operating profit outlook.
Recommendation Reviewed: September 15, 2025
Recommendation Changed: May 15, 2025
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Search topics about wealth insights and investments.PLDT
- Sector: Media and TelecommunicationsTechnologyTechnology Media and Telecommunications
- Sub Sector: Telecommunications
- Country: Philippines
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Fundamental View
AS OF 20 Aug 2025PLDT’s FY24 and 1H25 results were stable as expected; we see a modestly improving FY25 credit outlook aided by resilient EBITDA growth and residual tower sales, which could offset persisting high capex.
A potential stake sale of the data center business could drive further deleveraging.
While the spillover of a PHP 33 bn capex overrun to FY25 could weigh on free cash flows, we draw mild comfort that it was likely not due to fraud but rather a management misstep.
Business Description
AS OF 20 Aug 2025- PLDT is a leading telecom operator in the Philippines, competing alongside its main rival Globe Telecom in a predominant duopoly.
- PLDT provides 2G/3G/4G mobile, fixed-line, broadband, enterprise data, and other digital services to retail and corporate customers.
- PLDT operates through 2 main business segments – “Wireless Services” and “Fixed Line Services”.
- Its “Wireless” segment offers mobile voice, mobile SMS, mobile data and mobile broadband services to retail customers in the Philippines. These services are marketed under the “Smart Postpaid”, “Smart Prepaid”, "Sun Postpaid" and “TNT Prepaid” brands.
- Its “Fixed Line Services” segment provides fixed line voice, corporate data and home broadband services to retail and corporate customers in the Philippines.
- PLDT commercially launched 5G services on a small-scale basis in Jul-2020. It currently has over 3,000 5G sites nationwide.
- PLDT maintains dominant market shares in the mobile, fixed line voice, and the home broadband spaces.
- PLDT is backed by three established corporate groups, namely First Pacific (~15% stake), NTT Corporation (~12% stake) and JG Summit Holdings (~7% stake).
Risk & Catalysts
AS OF 20 Aug 2025Aggressive expansion by new entrant DITO over the next 2-4 years could chew away at PLDT’s market share and restrain recoveries in average revenues per user (ARPU).
PLDT incurs significant capex that has restrained improvements in its leverage metrics and free cash flows. This is worsened by a recent capex overrun that has induced mild corporate governance uncertainties (though these have eased in recent months).
Consistently high dividend payouts could worsen PLDT’s already negative free cash flows.
PLDT is exposed to $/PHP depreciation risks ($300 mn 2050 bond is fully unhedged).
Key Metric
AS OF 20 Aug 2025| PHP bn | FY22 | FY23 | FY24 | 1H24 | 1H25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.3% | 74.2% | 73.4% | 73.5% |
| Net Debt to Book Cap | 65.7% | 69.3% | 72.0% | 70.6% | 71.2% |
| Debt/Total Equity | 256.2% | 273.9% | 287.5% | 275.9% | 277.2% |
| Debt/Total Assets | 46.8% | 49.6% | 53.8% | 50.2% | 55.2% |
| Gross Leverage | 2.9x | 2.9x | 3.0x | 3.0x | 3.1x |
| Net Leverage | 2.7x | 2.8x | 2.9x | 2.9x | 3.0x |
| Interest Coverage | 7.4x | 6.5x | 6.1x | 6.3x | 5.8x |
| EBITDA Margin | 48.7% | 49.1% | 51.1% | 50.6% | 51.5% |
CreditSight View Comment
AS OF 20 Aug 2025We have a Market perform recommendation on PLDT and would avoid its 2050 bond. PLDT 2031 trades fairly to Globe 2030, Axiata 2030, and Bharti 2031. We do not like the PLDT 2050 that trades tight to other 2050 bonds in SSEA, including Reliance, Pertamina, and PLN. We are comfortable with PLDT’s sturdy credit profile aided by a resilient broadband business and tower sales, cushioning high capex and dividends. A minority stake sale of its data center business is also credit positive. Corporate governance fears have also eased post its capex overrun in end-2022. We are watchful of strong competition in the mobile space due to DITO’s ramp up.
Recommendation Reviewed: August 20, 2025
Recommendation Changed: May 31, 2022
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Search topics about wealth insights and investments.International Container Terminal Services Inc
- Sector: Transportation
- Sub Sector: Shipping and Infrastructure
- Country: Philippines
- Bond: ICTPM 3.5 31
- Indicative Yield-to-Maturity (YTM): 4.96%
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Fundamental View
AS OF 20 Aug 2025We expect ICTSI to remain resilient amid global growth slowdown fears owing to yield improvements and strong cost control.
ICTSI has steadily deleveraged over the past 5 years which we see as prudent financial management. Yet management’s recent lean towards growth at the expense of deleveraging could restrain improvements in credit metrics.
While ICTSI is exposed to material EM-related geopolitical risks, we think its geographically diversified revenue base across 20 countries limits country-specific risks.
While sizable capex and high dividend payouts could strain ICTSI’s credit profile, we take comfort in ICTSI’s robust OCF generation that should keep FCFs positive.
Business Description
AS OF 20 Aug 2025- ICTSI develops and operates common user container terminals, with a focus on those within Origin and Destination (O&D) ports based in emerging markets.
- ICTSI provides integrated ports services that facilitate the receiving, handling and storage of cargo. These are broadly split into four streams: vessel charges (i.e. services relating to moving cargo on and off ships), yard charges (i.e. services relating to moving cargo in the container and storage yards), storage fees (i.e. services relating to cargo and container storage), and other ancillary fees.
- ICTSI currently operates across 33 port concessions in 19 countries. As of end-1H25, ICTSI's revenues are well diversified across the Asia (43%), EMEA (19%) and the Americas (38%).
- ICTSI operates its container terminals under long-dated concession agreements (typically ~25 years) with the relevant local port authorities or governments. For some concessions, fees charged to customers are regulated by the authorities that prescribe maximum price limits and, in some cases, allow for CPI-linked tariff hikes. For other concessions, fees charged are unregulated and allow for greater price-setting flexibility and volatility too.
- ICTSI is required to make periodic fee payments to the respective authorities for the right to operate the concessions. These payments are typically a combination of fixed charges and variable charges based on cargo traffic volume or gross revenues.
Risk & Catalysts
AS OF 20 Aug 2025ICTSI is exposed to EM-related geopolitical, regulatory and operating risks. That said, we think the impact is mitigated by its geographically diversified revenue base across 20 countries that limits country-specific risks.
Trade uncertainties from Trump’s policies could hamper cargo volume growth.
Growing capex tendencies and high dividend payouts could strain ICTSI’s free cash flows and credit metrics, though we think the impact is mitigated by ICTSI’s robust operating cash flow generation.
While ICTSI is exposed to FX depreciation risks as most of its revenues and cash expenses are in EM currencies, natural hedging has been fairly effective thus far.
Key Metric
AS OF 20 Aug 2025| $ mn | FY22 | FY23 | FY24 | 1H24 | 1H25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.0% | 70.1% | 74.3% | 73.5% |
| Net Debt to Book Cap | 58.2% | 61.0% | 52.6% | 59.4% | 55.2% |
| Debt/Total Equity | 255.3% | 269.9% | 233.9% | 289.2% | 276.8% |
| Debt/Total Assets | 62.5% | 60.3% | 58.2% | 60.7% | 58.2% |
| Gross Leverage | 3.1x | 2.9x | 2.5x | 2.7x | 2.3x |
| Net Leverage | 2.5x | 2.4x | 1.9x | 2.2x | 1.8x |
| Interest Coverage | 4.6x | 4.4x | 4.9x | 4.6x | 5.3x |
| EBITDA Margin | 62.8% | 63.0% | 65.0% | 65.4% | 65.6% |
CreditSight View Comment
AS OF 20 Aug 2025We have a Market perform recommendation on ICTSI. We think ICTSI 2030 and 2031 trades fairly to PLDT 2031 and Globe Telecom 2030. We expect ICTSI’s credit metrics could remain improve slightly in FY25 as steady yield improvements and sturdy domestic trade activity could outweigh high capex, potential M&A, and trade uncertainties from Trump’s policies. While ICTSI is exposed to EM-related geopolitical and operating risks (notably in the Mid East and Russia-Ukraine), we believe these are mitigated by its highly geographically diversified revenues. We also expect ICTSI’s robust cash-generative business to drive positive free cash flows even amid persisting capex and dividends. We see low non-call risk for the ICTSI c.2026 perp
Recommendation Reviewed: August 20, 2025
Recommendation Changed: August 16, 2023
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Search topics about wealth insights and investments.Globe Telecom
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Telecommunications
- Country: Philippines
- Bond: GLOPM 3 35
- Indicative Yield-to-Maturity (YTM): 5.00%
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Fundamental View
AS OF 20 Aug 2025Globe’s 1H25 results were poorer than expected, but we believe credit metrics may improve modestly through 2H25 from modest EBITDA growth, lower YoY capex, and residual tower sales closures.
While we acknowledge the stiff competitive pressures brought about by new entrant DITO, the impact is mitigated by Globe’s still-dominant mobile market position and DITO’s slowing expansion (given its weak financials and the costly capex involved).
Weakness in the broadband business has lessened since 3Q24 and could stabilize by end-2025.
While Globe earlier raised the upper end of its dividend policy, we expect dividend payouts to remain stable.
Business Description
AS OF 20 Aug 2025- Globe is a leading telecom operator in the Philippines, competing alongside its main rival PLDT in a duopoly setting.
- Globe provides 2G/3G/4G mobile, fixed-line, broadband, enterprise data, and other digital services to retail and corporate customers.
- Globe operates through 2 main business segments – “Mobile Services” and “Fixed Line and Home Broadband Services”.
- Its “Mobile Services” segment offers mobile voice, mobile SMS and mobile data services to retail customers in the Philippines. These services are marketed under the “Globe Postpaid”, “Globe Prepaid” and “TM” brands.
- Its “Fixed Line and Home Broadband Services” segment provides fixed line voice, corporate data and home broadband services to retail and corporate customers in the Philippines.
- Globe commercially launched 5G services on a small-scale basis in Jun-2019. It currently maintains 5G coverage of 96% of the National Capital Region, with over 2,000 5G sites nationwide.
- Globe maintains dominant market shares in the mobile data, voice and SMS space (FY22 revenue market share [RMS] of 52% vs PLDT 40%), but loses out to PLDT in the home broadband space (FY22 RMS of 28%-30% vs PLDT 48%-50%).
- Globe is largely owned by two established corporate groups – Ayala Corporation (~47 stake) and Singtel (~43% stake).
Risk & Catalysts
AS OF 20 Aug 2025Globe faces mounting competitive pressures from new mobile entrant DITO and incumbent broadband competitor PLDT.
Aggressive expansion by new entrant DITO over the next 2-4 years could chew away at Globe’s market share and restrain recoveries in average revenues per user (ARPU).
Globe incurs heavy capex that has pressurized its leverage metrics and free cash flows. That said, capex had peaked in FY23 and should meaningfully decline ahead.
Consistent dividend payouts could weigh on Globe’s free cash flows; Globe recently raised the upper end of its dividend policy from 75% to 90% of net income, suggesting an increased skew to shareholder-friendly actions.
Key Metric
AS OF 20 Aug 2025| PHP bn | FY22 | FY23 | FY24 | 1H24 | 1H25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 67.5% | 69.7% | 70.2% | 69.5% | 69.9% |
| Net Debt to Book Cap | 63.7% | 66.6% | 66.4% | 66.1% | 66.5% |
| Debt/Total Equity | 208.1% | 230.5% | 235.8% | 227.6% | 232.3% |
| Debt/Total Assets | 57.1% | 60.3% | 62.4% | 60.3% | 62.4% |
| Gross Leverage | 3.9x | 4.3x | 4.4x | 4.3x | 4.5x |
| Net Leverage | 3.7x | 4.1x | 4.2x | 4.1x | 4.3x |
| Interest Coverage | 5.9x | 4.6x | 4.3x | 4.4x | 4.1x |
| EBITDA Margin | 46.7% | 47.7% | 49.7% | 49.9% | 50.4% |
CreditSight View Comment
AS OF 20 Aug 2025We have a Market perform recommendation on Globe with a preference for its c.2026 perp. Globe 2030 trades slightly wider to PLDT 2031 that we view as fair. Globe c.2026 perp trades at a juicy 1.4x perp-to-Globe 2030 senior multiple that we view as attractive for short-dated “IG” paper. We anticipate a modestly improving credit outlook as lower capex and residual tower sales closures are offset by a continued weak broadband business and sticky dividends. Stiff competition in both the mobile and broadband spaces is a key concern too. Globe also recently revised its dividend policy to 60%-90% of PAT from 60%-75% previously, suggesting an increased skew towards shareholder-friendly actions, though this has not happened yet.
Recommendation Reviewed: August 20, 2025
Recommendation Changed: June 18, 2024
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Search topics about wealth insights and investments.SMC Global Power
- Sector: Energy
- Sub Sector: Independent Power Producers
- Country: Philippines
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Fundamental View
AS OF 20 Aug 2025We see lower non-call risk for SMC GP’s c.2025 and c.2026 perps owing to strong near-term parental funding support, its recent c.2024 perp refinancing, and recent bond exchange/tender with a new $900 mn c.2029 perp issuance.
We see an improving credit outlook for SMC GP aided by lower thermal coal input costs, new contracts, and capacity additions. Net cash inflows of $2.1-$2.2 bn from the completion of an LNG deal is also positive.
While SMC GP improved its cost passthrough contractual mix from end-FY23 onwards, the company still remains exposed to high thermal coal input costs (~40-50% of contracts).
SMC GP incurs sizable capex that has led to additional debt incurrence and elevated credit metrics.
Business Description
AS OF 20 Aug 2025- SMC GP is a leading power generation and distribution company in the Philippines. Its total generation capacity stands at 4.7 GW, accounting for ~20% of the national grid.
- The bulk of its revenues is derived from power generation (~82%), with the remainder from electricity distribution and retailing (~18%).
- It operates 7 power generating plants across diversified energy sources, comprising coal (~62%), natural gas (~25%), hydro (~12%) and battery energy storage (~1%).
- Through long-term power supply agreements and retail supply contracts, SMC GP either sells electricity directly to customers (including large Philippines power distribution company Manila Electric Company, distribution utilities and other industrial customers), or through the Philippine Wholesale Electricity Spot Market.
- SMC GP acts as the Independent Power Producer Administrator (IPPA) for three power plants (~54% of total capacity), where it has the right to sell electricity generated by the IPPs without having to bear large upfront capital expenditures for plant construction and maintenance.
- SMC GP also distributes and retails electricity services through its wholly-owned subsidiary Albay Power and Energy, which distributes power in the province of Albay, Luzon.
- SMC GP is a wholly-owned unlisted subsidiary of San Miguel Corporation, one of the largest and most diversified conglomerates in the Philippines based on total revenues and assets.
Risk & Catalysts
AS OF 20 Aug 2025SMC GP still has $307 mn/$1.2 bn of c.2025 and c.2026 perps outstanding to be addressed, though we see low non-call risks.
A moderate portion of SMC GP’s off-take contracts do not contain cost pass-through mechanisms. This exposes the company to a rise in thermal coal input costs that could squeeze its EBITDA margins.
SMC GP incurs sizable capex that has spurred additional debt incurrence. Consequently, its credit metrics remain elevated.
Over 80% of SMC GP’s installed capacity is thermal coal or gas-fired, which may be viewed unfavorably from an ESG perspective.
Key Metric
AS OF 20 Aug 2025| PHP bn | FY22 | FY23 | FY24 | 1H24 | 1H25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 69.2% | 62.8% | 64.4% | 62.8% | 59.5% |
| Net Debt to Book Cap | 66.4% | 59.4% | 57.7% | 60.9% | 50.5% |
| Debt/Total Equity | 224.6% | 168.7% | 181.2% | 169.2% | 146.7% |
| Debt/Total Assets | 79.0% | 73.8% | 73.8% | 72.1% | 68.4% |
| Gross Leverage | 19.4x | 12.9x | 11.9x | 10.7x | 10.4x |
| Net Leverage | 18.6x | 12.2x | 10.7x | 10.4x | 8.8x |
| Interest Coverage | 1.4x | 2.2x | 2.3x | 2.4x | 2.2x |
| EBITDA Margin | 13.2% | 26.4% | 26.6% | 30.1% | 37.4% |
CreditSight View Comment
AS OF 20 Aug 2025We have an Outperform recommendation on SMC GP. We think refinancing risk on the c.2025–2026 perps has meaningfully decreased post its multiple bond exchange and tender offers. We are comfortable with SMC GP’s improving credit outlook, potential for forthcoming parental support, and management’s willingness and ability to repay the perps. The completion of the $3.3 bn LNG deal is also positive. We continue to see low non-call risk for the c.2026 perps, and see the 8%+ yields on the c.2029 and c.2030 perps as attractive. Key risks we are watchful of include any weakening of parental funding support (due to SMC’s own sizable infra capex) and overly aggressive capex..
Recommendation Reviewed: August 20, 2025
Recommendation Changed: September 09, 2024
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Search topics about wealth insights and investments.State of Qatar
- Bond: QATAR 3.25 26
- Indicative Yield-to-Maturity (YTM): 4.10%
- Credit Rating : ( Aa2 / AA / AA- )
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Country Overview
AS OF 19 Aug 2025- Hydrocarbon-driven Economy: Qatar’s economy is primarily fueled by its vast reserves of oil and natural gas. As the world’s largest exporter of liquefied natural gas (LNG), the country’s economic health and government revenues are highly dependent on global energy prices. This resource has endowed Qatar with one of the world’s highest per capita incomes and significant fiscal strength.
- Vision for Diversification: Under its Qatar National Vision 2030, the country is actively working to reduce its reliance on hydrocarbons. The government is investing heavily in developing a knowledge-based economy and promoting sectors like finance, logistics, and tourism to create more sustainable and diversified growth.Robust Fiscal Position: Due to high energy prices, Qatar has consistently maintained substantial fiscal and current account surpluses. These surpluses have allowed the government to build significant financial reserves and sovereign wealth, providing a strong economic buffer against external shocks and funding major infrastructure projects.
Macro Fundamentals
AS OF 19 Aug 2025- Pegged Currency and Monetary Policy. The Qatari riyal is pegged to the US dollar, which means the Qatar Central Bank's monetary policy decisions are closely linked to those of the US Federal Reserve. This policy provides a stable exchange rate and helps anchor inflation expectations.
- Strong Twin Surpluses. Qatar's external position is exceptionally strong, characterized by persistent and large current account and fiscal surpluses. While these surpluses have moderated from their 2022 peaks as energy prices have stabilized, they are projected to remain in positive territory, ensuring financial stability.
- Significant Public and Private Investment. Both public and private sectors are focused on large-scale infrastructure and development projects. Key investments, such as the massive North Field East LNG expansion and continued growth in the services sector (particularly post-World Cup), are central to the country's economic strategy.
CreditSight View Comment
AS OF 27 Sep 2025Recommendation Reviewed:
Recommendation Changed:
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Search topics about wealth insights and investments.Security Bank (PH)
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.694%
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Fundamental View
AS OF 18 Aug 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion pre-pandemic led to a large asset quality hit when COVID-19 struck. The bank completed working through its risk issues at end-2021 and has resumed brisk growth in the retail book since.
The bank had a less well-established deposit franchise than most peers, resulting in a heavy hit to NIMs when rates rose this cycle. This has led it to focus aggressively on growing the higher yielding retail and MSME segments, the latter via forming a new business banking segment in 2022.
Previously high capital ratios have hence fallen; the CET1 ratio is a low 12-13%.
MUFG is a 20% shareholder of Security Bank.
Business Description
AS OF 18 Aug 2025- Security Bank was established in 1951 and obtained its universal banking license from the BSP in 1994. It is today the 9th largest bank in the Philippines.
- The bank is majority-owned by longtime owner Frederick Y. Dy (23.7%) and MUFG Bank (20%), which acquired its stake in April 2016.
- SB Finance, a joint venture between Security Bank and Thailand's Bank of Ayudhya (Krungsri), a consolidated subsidiary of MUFG, was launched in 2019. The unit is a consumer finance company formed to engage in the unsecured loans business in the Philippines, focusing on the lower mass retail segment.
- Security Bank's loan portfolio is 33% consumer, 3% MSME, 29% middle market and 35% corporate at 1Q25. The consumer and MSME book comprises mortgages (45%), auto loans (23%), credit card (23%) and small business loans (9%).
Risk & Catalysts
AS OF 18 Aug 2025Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
Margin pressure from the bank’s earlier weaker deposit franchise is easing with the declining rate environment and growth focus on the higher yielding retail and MSME (business banking) segments. It is now exercising some prudence in retail loan growth given the emergence of stress in credit cards.
Asset quality is showing strains from the brisk growth in riskier segments as we had anticipated. We remain cautious about the asset quality implications given the relatively thin reserve cover and capital buffer.
Capital ratios have fallen due to brisk RWA growth and are now behind peers. We regard this level as low, but do not rule out capital support from MUFG if needed.
Key Metric
AS OF 18 Aug 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.43% | 4.23% | 4.49% | 4.73% | 4.56% |
| ROA | 1.0% | 1.4% | 1.1% | 1.1% | 1.0% |
| ROE | 5.6% | 8.4% | 7.0% | 8.1% | 8.1% |
| PPP ROA | 2.30% | 2.17% | 1.97% | 2.18% | 2.23% |
| CET1 Ratio | 19.1% | 16.1% | 15.3% | 12.9% | 12.3% |
| Total Equity/Total Assets | 17.88% | 14.94% | 15.62% | 12.50% | 12.80% |
| Gross NPL Ratio | 3.94% | 2.95% | 3.36% | 2.85% | 3.16% |
| Net LDR | 85.7% | 83.0% | 88.8% | 84.6% | 75.0% |
| Liquidity Coverage Ratio | 150% | 144% | 158% | 178% | 194% |
| Net Stable Funding Ratio | 138% | 122% | 131% | 130% | 140% |
CreditSight View Comment
AS OF 19 Aug 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion leading up to the pandemic led to a large asset quality fallout. It has since resumed aggressive growth in higher yielding but riskier retail and MSME segments to counter NIM pressure. This along with improving funding costs from a declining rate environment has supported the NIM. Asset quality however is showing strains from the brisk growth in riskier segments as we had anticipated, leading it to start exercising some prudence in retail loan growth. We remain cautious about the asset quality implications given the relatively thin reserve cover and capital buffer (~12-13% CET1 ratio). We have an Underperform recommendation.
Recommendation Reviewed: August 19, 2025
Recommendation Changed: May 21, 2024
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Search topics about wealth insights and investments.Bank of Philippine Islands
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: BPIPM 5 30
- Indicative Yield-to-Maturity (YTM): 4.40%
- Credit Rating : BBB
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Fundamental View
AS OF 14 Aug 2025Bank of the Philippine Islands (BPI) is the 3rd largest bank in the Philippines by assets.
We view the bank as too big to fail given its systemic importance in the country. There is also a strong probability of support from the government in addition to its main shareholder, the Ayala Corporation if needed.
BPI has a long history, and we view it as a fundamentally sound bank with strong and improved profitability, and comfortable liquidity. Capital management however has become less conservative, and while asset quality is relatively well managed, we are keeping an eye on strong growth in the non-wholesale book.
Business Description
AS OF 14 Aug 2025- The history of the Bank of the Philippine Islands traces back to 1851. It is the oldest bank in the Philippines and South East Asia. It was first listed on the Philippine Stock Exchange in 1971, and became a universal bank in 1982.
- Ayala Corporation, one of the biggest conglomerates in the country, became BPI's dominant shareholder in 1969. Ayala Corp still holds a 49% stake in the bank.
- BPI has been acquisitive across the years. It merged with Far East Bank and Trust Company and acquired Ayala Insurance Holdings Corp in 2000. It acquired DBS Bank Philippines in 2001 and Prudential Bank Philippines in 2005. DBS was a shareholder of BPI but exited its position in 2013. More recently in January 2024, it completed the acquisition of the Gokongwei conglomerate's Robinsons Bank.
- The bank is predominantly a corporate bank with 70% of its loan book outstanding to corporates, and the balance to MSME and retail as of 2Q25. The bank intends to further raise the MSME and retail segment share of loans.
Risk & Catalysts
AS OF 14 Aug 2025Any rating downgrade of the Philippine sovereign would have a negative impact on BPI.
Direct impact from US tariffs is limited given that the Philippines is not a major goods exporter, but there will be second order effects from a slowdown in regional and global growth. Loan growth will continue to be retail/MSME driven in FY25.
BPI’s strong focus on unsecured retail and MSME growth has put some pressure on asset quality, and provision reserves have been pared down. We see asset quality risks, but BPI’s wholesale-focused book (70% of total loans) provide comfort and provisioning capacity is strong.
There is NIM pressure from declining policy rates, and another 50 bp of cuts are expected in 2H25. BPI however is on track for NIM expansion this year on the back of a strong pivot towards better yielding retail/MSME, as well as by RRR reductions and a reduced liquidity drag.
Key Metric
AS OF 14 Aug 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 2.01% | 2.41% | 2.52% | 2.78% | 2.97% |
| Reported ROA (Cumulative) | 1.10% | 1.59% | 1.93% | 1.98% | 2.01% |
| Reported ROE (Cumulative) | 8.4% | 13.1% | 15.4% | 15.1% | 14.9% |
| Net Interest Margin | 3.30% | 3.59% | 4.09% | 4.31% | 4.58% |
| CET1 Ratio | 15.8% | 15.1% | 15.3% | 13.9% | 14.5% |
| Total Equity/Total Assets | 12.1% | 12.2% | 12.4% | 13.0% | 13.5% |
| NPL Ratio | 2.49% | 1.76% | 1.84% | 2.13% | 2.25% |
| Provisions/Loans | 0.91% | 0.58% | 0.22% | 0.32% | 0.64% |
| Liquidity Coverage Ratio | 221% | 195% | 207% | 159% | n/m |
| Net Stable Funding Ratio | 155% | 149% | 154% | 146% | n/m |
Our View
AS OF 19 Aug 2025BPI is the third largest bank in the Philippines with a long history. Its traditionally conservative approach has led to a loss of loan market share in the past, as well as a lower NIM than BDO and MBT. Recent brisk expansion in higher yielding retail and MSME loans has strongly improved profitability levels and driven NIM expansion despite rate cuts. While asset quality has slipped with the loan mix shift, it remains acceptable. However, we are watchful of risks from the strong growth in the non-wholesale book as provision reserves have been pared down to lower levels than peers. Still, we are overall comfortable with BPI given the large wholesale book (70% of loans) and underwriting record, strong provisioning capacity and comfortable liquidity. We have BPI on U/P from an RV standpoint.
Recommendation Reviewed: August 19, 2025
Recommendation Changed: May 21, 2025
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Fundamental View
AS OF 14 Aug 2025UBS agreed to acquire Credit Suisse in March 2023 after the latter collapsed following a severe liquidity crisis.
CS was a large and complex organisation, so the integration, and the inevitable associated losses and costs, will dominate UBS’s strategic outlook and financial performance for several years.
However, UBS was able to negotiate substantial downside protection which should shield it from losses at CS.
Away from CS, UBS has reshaped its business model, with a greater emphasis on wealth management and less focus on investment banking, particularly fixed income.
Its earnings remain somewhat dependent on capital market conditions, but its capital, asset quality and profitability ratios have been among the strongest for European banks.
Business Description
AS OF 14 Aug 2025- Headquartered in Zurich, Switzerland, UBS has private, corporate and institutional clients worldwide and retail clients in Switzerland. It is one of the world's largest wealth managers.
- It completed the acquisition of CS on 12 June 2023. It has merged CS’s domestic Swiss bank (Credit Suisse Schweiz AG) with its own domestic bank (UBS Switzerland AG) in 2024, keeping the CS brand “for the time being”.
- CS’s holding company (Credit Suisse Group AG) has been merged into UBS Group AG, so that the group has a single holding company, and the operating subsidiaries, including UBS AG and Credit Suisse AG, were merged on 31 May 2024.
- UBS operates through its Corporate Center and four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, and the Investment Bank, plus a new Non-core and Legacy division following the acquisition of CS.
- The Investment Bank has been restructured in recent years to scale back fixed income trading and focus on equities trading and origination & advisory business.
Risk & Catalysts
AS OF 14 Aug 2025The acquisition of CS will be a long and complex process, and the necessary restructuring is likely to result in losses and costs, although UBS has substantial protection, not least in the large negative goodwill.
Litigation costs have been a feature of UBS’s results in recent years, although it has agreed settlements in various cases recently.
A French court imposed fines and civil damages of €4.5 bn ($5.1 bn) in February 2019, which UBS appealed. The Court of Appeal retried the case de novo in March 2021 and reduced the fine to €3.75 mn plus civil damages of €800 mn and confiscation of €1 bn. UBS has set aside reserves of €1.1 bn. The French Supreme Court overturned the penalties and damages in November 2023, and the case has been remanded to the Court of Appeal for a retrial.
Key Metric
AS OF 14 Aug 2025| $ mn | 2Q25 | Y24 | Y23 | Y22 | Y21 |
|---|---|---|---|---|---|
| Return On Equity | 10.9% | 6.0% | 38.4% | 13.0% | 12.4% |
| Total Revenues Margin | 3.0% | 3.0% | 2.9% | 3.1% | 3.2% |
| Cost/Income | 80.5% | 84.8% | 95.0% | 72.1% | 73.6% |
| CET1 Ratio (Transitional) | 14.4% | 14.3% | 14.3% | 14.2% | 15.0% |
| CET1 Ratio (Fully-Loaded) | 14.4% | 14.3% | 14.4% | 14.2% | 15.0% |
| Leverage Ratio (Fully-Loaded) | 5.5% | 5.8% | 5.4% | 5.7% | 5.7% |
| Liquidity Coverage Ratio | 182% | 188% | 216% | 164% | 155% |
| Impaired Loans (Gross)/Total Loans | 0.6% | 0.6% | 0.4% | 0.4% | 0.4% |
CreditSight View Comment
AS OF 23 Sep 2025We have Market perform recommendations on UBS AG (operating bank) and UBS Group (holding company) having revised the HoldCo recommendation from Underperform in August 2024. Its rescue and takeover of Credit Suisse in March 2023 was a seminal event that has had major consequences for UBS’s strategy and financial performance, as well as carrying substantial execution risk. However, the integration is on track, and UBS’s performance has been steadily improving. Capital, asset quality and liquidity all look strong, although Swiss regulatory capital requirements are set to increase significantly in coming years.
Recommendation Reviewed: September 23, 2025
Recommendation Changed: August 14, 2024
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Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 13 Aug 2025While Meta is executing strongly from a product perspective, we are concerned by its surging AI investments and regulatory risks. Meta acquired a 49% stake in Scale AI for $14 bn in 2Q25. The company expects capex to have “similarly significant” dollar growth in 2026; this implies it could be ~$100 bn or ~45% of sales in 2026.
There are also concerns on the regulatory front. We could potentially see a ruling in the next several months from the FTC suit which is seeking to unwind prior acquisitions of Instagram and WhatsApp. In addition, the EC’s DMA decision could require modifications that impact its European revenue. Gross leverage is 0.3x although net cash declined sharply to $18.2 bn in 2Q25. We also think Meta could be in the market fairly soon with a jumbo bond deal.
Business Description
AS OF 13 Aug 2025- Meta Platforms is the largest social networking company in the world. Meta's advertising revenue is primiarly from Facebook and Instagram, although also on Messenger, Whatsapp, Threads, and third-party affiliated websites and apps.
- In 2Q25, Family of Apps was 99% of revenue (98.0% from advertising and 1.2% from other) and Reality Labs was 1% of revenue. Reality Labs generated $18.1 bn in operating losses during LTM 2Q25.
- There are 3.48 bn Family Daily Active People (DAP) as of 2Q25, and the Family Average Revenue per Person (ARPP) was $13.65 quarterly in 2Q25.
- Meta is headquartered in Menlo Park, California. Employee headcount was >75.9k at 2Q25.
Risk & Catalysts
AS OF 13 Aug 2025In December 2020, the FTC filed a lawsuit against Meta seeking to unwind prior acquisitions of Instagram and Whatsapp.
Meta’s business model relies almost entirely on user-generated content, exposing it to customer privacy concerns and regulatory changes (e.g., Section 230 protections).
Surging capex for AI and continued investments in Reality Labs could weaken the balance sheet although Meta has reportedly raised $29 bn in external financing from PIMCO and Blue Owl for its Louisiana data center project.
We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments.
A potential ban of TikTok (extended through 9/17/2025) would positively impact Meta and others with short-form video products.
Key Metric
AS OF 13 Aug 2025| $ mn | 2021 | 2022 | 2023 | 2024 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue YoY % | 37.2% | (1.1%) | 15.7% | 21.9% | 19.4% |
| EBITDA | 63,882 | 49,622 | 71,955 | 101,568 | 112,933 |
| EBITDA Margin | 54.2% | 42.6% | 53.3% | 61.7% | 63.2% |
| CapEx % of Sales | 16.3% | 27.5% | 20.8% | 23.8% | 30.6% |
| Sh. Ret. % of CFO-CapEx | 116% | 152% | 46% | 68% | 78% |
| Net Debt | (47,998) | (30,815) | (47,018) | (48,989) | (18,239) |
| Gross Leverage | 0.0x | 0.2x | 0.3x | 0.3x | 0.3x |
| EV / EBITDA | 14.0x | 5.8x | 12.3x | 14.5x | 16.6x |
CreditSight View Comment
AS OF 31 Jul 2025While Meta is executing strongly from a product perspective, we are concerned by its surging AI investments and regulatory risks. Meta acquired a 49% stake in Scale AI for $14 bn in 2Q25. The company expects capex to have “similarly significant” dollar growth in 2026; this implies it could be ~$100 bn or ~45% of sales in 2026. There are also concerns on the regulatory front. We could potentially see a ruling in the next several months from the FTC suit which is seeking to unwind prior acquisitions of Instagram and WhatsApp. In addition, the EC’s DMA decision could require modifications that impact its European revenue. Gross leverage is 0.3x although net cash declined sharply to $18.2 bn in 2Q25. We also think Meta could be in the market fairly soon with a jumbo bond deal.
Recommendation Reviewed: July 31, 2025
Recommendation Changed: July 31, 2025
Featured Issuers
Bank of Philippine Islands
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