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T-Mobile US
- Sector: Technology Media and Telecommunications
- Sub Sector: Telecommunications
- Region: US
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Fundamental View
AS OF 18 Mar 2025We expect T-Mobile will maintain its position as the industry leader in postpaid phone net additions, service revenue and EBITDA growth in 2025. We think the company has significant subscriber runway remaining in the suburban/rural and enterprise markets.
Adjusted net leverage (2.4x at 4Q24) is 0.3x/0.5x lower than AT&T/Verizon. Relatively strong EBITDA growth and a modest dividend commitment results in greater financial flexibility than peers.
T-Mobile benefits from the strongest spectrum position in the industry, including an average of 181 MHz in the 2.5 GHz band, which results in better 5G network coverage than AT&T and Verizon.
Business Description
AS OF 18 Mar 2025- TMUS is the one of the top 3 U.S. wireless carriers and is owned ~50% by Deutsche Telekom (DT). On April 1, 2020, TMUS and S completed an all-stock merger, valuing S at an EV of approximately $59.7 bn.
- TMUS ended 4Q24 with ~130 mn customers, including 104 mn postpaid and 25 mn prepaid.
- TMUS reaches 330+mn POPs with its Extended Range 5G network (using the 600 MHz spectrum) and reaches 300mn customers with its Ultra Capacity 5G.
Risk & Catalysts
AS OF 18 Mar 2025Converged wireless/broadband offers from cable operators raises the risk of pricing pressure in the mature consumer wireless market.
The company has not shied away from acquisitions. T-Mobile recently acquired Mint Mobile and announced deals for US Cellular and two FTTH JVs (Lumos and MetroNet). So far, M&A has not had much impact on T-Mobile’s credit metrics, but further moves into FTTH may be received poorly by investors.
With T-Mobile’s credit rating now comfortably in the mid-BBB area and leverage in the vicinity of the group’s mid-2x target area, we expect the company’s capital allocation to shift toward shareholder returns.
Key Metric
AS OF 18 Mar 2025| $ mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Revenue | 68,397 | 80,118 | 79,571 | 78,558 | 81,400 |
| Organic Revenue Growth | 5.8% | 7.3% | (0.7%) | (1.3%) | 3.6% |
| EBITDA | 24,557 | 26,924 | 27,821 | 29,428 | 31,864 |
| Adj. EBITDA Growth | 4.3% | (64.0%) | 33.9% | 5.8% | 8.3% |
| Adj. EBITDA Margin | 35.9% | 33.6% | 35.0% | 37.5% | 39.1% |
| CapEx % of Sales | 16.1% | 15.4% | 17.6% | 12.5% | 10.9% |
| Total Debt | 76,660 | 79,574 | 78,425 | 83,586 | 84,255 |
| Net Debt | 66,275 | 72,943 | 73,918 | 78,451 | 78,846 |
| Gross Leverage | 3.5x | 3.4x | 3.0x | 2.9x | 2.7x |
| Net Leverage | 0.0x | 3.0x | 2.7x | 2.6x | 2.4x |
| Interest Coverage | 9.0x | 7.2x | 8.0x | 8.3x | 8.7x |
| FCF as % of Debt | 14.1% | 13.7% | 13.2% | 19.2% | 23.0% |
CreditSight View Comment
AS OF 25 Apr 2025We expect TMUS will once again lead the Big 3 in major KPIs in 2025, including ~5% EBITDA growth. We view earnings/growth visibility as higher than peers, with the outlook supported by its leading 5G mid-band coverage (over 300 million PoPs with ~200 MHz) and historical under-penetration in rural and enterprise markets. T-Mobile also boasts the lowest leverage (~2.3x) and strongest FCF/debt ratio amongst the Wireless Big 3, while its rising FCF generation and comparatively low dividend commitment provide flexibility for selective M&A. Despite the rising focus on convergence, we believe TMUS will stick with its off-balance sheet strategy for FTTH JVs and view the risk of a transformational broadband acquisition (ILEC or cable) as extremely low.
Recommendation Reviewed: April 25, 2025
Recommendation Changed: March 18, 2021
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Search topics about wealth insights and investments.Netflix Inc.
- Sector: Media
- Sub Sector: Technology
- Region: US
- Bond: NFLX 4.875 30
- Indicative Yield-to-Maturity (YTM): 4.410%
- Credit Rating : Baa1/A/-
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Fundamental View
AS OF 18 Mar 2025- Netflix is one of the few clear winners in the industry’s transition to streaming, and we believe the group’s leading position will be bolstered in 2025 as legacy media companies continue to rein in spending and international ambitions.
- From a financial perspective, we expect Netflix will deliver 20+% EBITDA growth in 2025 driven by a mix of subscriber growth, price hikes and margin expansion.
- Netflix’s financial policy is relatively conservative. While the company no longer targets $10-15 billion of gross debt, we view Netflix’s new financial policy as an evolution rather than a revolution and expect credit metrics to remain best in class.
Business Description
AS OF 18 Mar 2025- NFLX is the world's leading subscription streaming entertainment service with ~302 mn paid streaming subs in 190+ countries around the world. NFLX's programming includes original & acquired TV series, documentaries and feature films.
- NFLX began expanding internationally with the launch of services in Canada (Sep 2010), followed by LatAm (Sep 2011), and the UK and Ireland (Jan 2012). NFLX launched services in 17 more markets at a measured pace through the end of 2015 before launching in the rest of the world in Jan 2016 (ex-China, N Korea, Syria, Crimea).
- As of FY24, Netflix's regional subscriber breakdown was as follows: (1) EMEA - 101.1 mn; (2) UCAN - 89.6 mn; (3) APAC - 57.5 mn and (4) LATAM - 53.3 mn.
- Ted Sarandos and Greg Peters are Co-CEOs, with Mr. Sarandos appointed to the position in July 2020 and Mr. Peters in January 2023. Co-founder Reed Hastings was appointed as executive chairman of the Board in January 2023.
Risk & Catalysts
AS OF 18 Mar 2025- Market Saturation: Netflix is highly penetrated in the US market, so future growth will become increasingly dependent on price increases, uptake of the ad tier and success on the password sharing crackdown. The recent WWE and NFL deals also opens the door to higher-priced sports programming.
- Increased Competition: Several large competitors including Amazon and Apple are increasingly leaning into DTC video offerings on a global basis. Heightened competition may result in rising churn & declining gross additions for NFLX.
- M&A Risk: Netflix is in the early stages of an expansion into video games and has already acquired several studios. Additionally, several legacy media companies are weakly positioned and are actively considering asset sales. We believe Netflix has no interest in linear TV assets, but could be open to a studio purchase under the right circumstances.
Key Metric
AS OF 18 Mar 2025| $ mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Revenue | 24,996 | 29,698 | 31,616 | 33,723 | 39,001 |
| Revenue YoY % | 24.0% | 18.8% | 6.5% | 6.7% | 15.6% |
| EBITDA | 5,116 | 6,806 | 6,695 | 7,650 | 11,019 |
| EBITDA Growth | 64% | 33% | (2%) | 14% | 44% |
| Cash Content Expense | 12,537 | 17,469 | 16,660 | 13,140 | 17,003 |
| CFO - CapEx | 1,929 | (132) | 1,619 | 6,926 | 6,922 |
| Dividends/CFO-Capex | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| LTM CFO-CapEx to Debt | 11.8% | (0.9%) | 11.3% | 47.6% | 44.4% |
CreditSight View Comment
AS OF 18 Apr 2025We believe Netflix’s premium valuation is justified given the group’s leading scale, operating momentum and credit metrics, which stand in stark contrast to the pressures facing legacy media peers. Netflix is one of the few clear winners in the industry’s transition to streaming, and we believe the group is on track to extend its leading position during a period of rising macro uncertainty since its legacy media competition is much more exposed to advertising market pressures. The company’s gross leverage is already best in class at ~1.3x, and we expect Netflix can generate ~$8+ billion of FCF in FY25 with a FCF to debt ratio in the ~60% area. Netflix is also positioned to maintain its double-digit top line and profit growth in 2025.
Recommendation Reviewed: April 18, 2025
Recommendation Changed: October 20, 2022
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Search topics about wealth insights and investments.Sumitomo Mitsui Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 18 Mar 2025After reorganising and building up capital for the full impact of Basel III, SMFG has in the past few years been acquisitive to build its next phase of growth, and now has a lower capital buffer than Mizuho.
In FY23, SMFG showed the best improvement in net interest income and fee income, but also had a number of one-offs in its results – insurance payouts for SMBCAC planes stuck in Russia offset by losses on the sale of its railcar leasing fleet in the US, as well as an impairment of its goodwill in FE Credit – that on the whole reduced net income. 9M24 results has showed improvements.
Given its size and systemic importance, SMFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 18 Mar 2025- The core unit of SMFG is Sumitomo-Mitsui Banking Corp (SMBC), whose main predecessors were Sumitomo Bank and Mitsui Bank.
- SMFG does not have a large trust business as Sumitomo Trust and Chuo Mitsui Trust chose not to join SMFG, but merged with each other to form the separate Sumitomo Mitsui Trust Holdings.
- SMFG's group companies include the securities firm SMBC Nikko, SMBC Trust Bank, SMBC Card Company, SMBC Consumer Finance, Sumitomo Mitsui Finance and Leasing, SMFG India Credit Company (SMICC), Sumitomo Mitsui DS Asset Management, and SMBC Aviation Capital.
- It has been acquisitive over the years, particularly in emerging Asia and leasing assets. In 2021, the group took a 49% stake in Vietnam's FE Credit, 74.9% of Indian NBFI Fullerton Capital (now called SMICC), 4.99% of Philippines' RCBC, and 4.5% of US investment bank Jefferies. In 2022, it increased its stake in RCBC to 20%. In 2023, it acquired a 15% stake in Vietnam's VP Bank, and announced its intention to increase its stake in Jefferies from 4.5% to 15%, and in 2024 took its stake in SMICC to 100%.
Risk & Catalysts
AS OF 18 Mar 2025Similar to the other megabanks, SMFG aims to focus more on the US, and reduce low return RWAs in Europe and Asia ex-Japan.
Credit costs have seen some volatility. In FY23 bank level credit costs were good but worse at the card and personal unsecured loans units. 9M24 credit costs were up 17% YoY, mostly related to overseas banking subsidiaries. It has the lowest NPL ratio amongst the megabanks.
SMFG has taken stakes in FE Credit (49%) and VP Bank (15%) in Vietnam, Fullerton in India (100%, now renamed SMICC or SMFG India Credit Co) and RCBC in the Philippines (20%), to increase its exposure to emerging growth areas. It supported SMBC Aviation in its acquisition of Goshawk, and is increasing its 4.5% stake in Jefferies to 15%. However, FE Credit faced losses in 2022 and 2023 as a result of the Vietnam slowdown in 2022, highlighting the risks associated with EM personal unsecured lending.
Key Metric
AS OF 18 Mar 2025| JPY bn | FY21 | FY22 | FY23 | 3Q23 | 3Q24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.64% | 0.68% | 0.70% | 0.68% | 0.78% |
| Operating Income/Average Assets | 1.23% | 1.26% | 1.47% | 1.38% | 1.47% |
| Operating Expense/Operating Income | 62% | 61% | 57% | 60% | 56% |
| Pre-Impairment Operating Profit / Average Assets | 0.48% | 0.51% | 0.58% | 0.61% | 0.68% |
| Impairment charge/Average Loans | (0.31%) | (0.22%) | (0.27%) | (0.18%) | (0.19%) |
| ROAA | 0.30% | 0.32% | 0.36% | 0.40% | 0.53% |
| ROAE | 5.9% | 6.5% | 7.0% | 8.0% | 10.2% |
CreditSight View Comment
AS OF 04 Feb 2025SMFG’s banking business had performed well, while its non-bank subsidiaries had underperformed over FY21-22. The group had a better 2H vs a poor 1H23, with improved trading and fee revenues, partially offset by higher credit costs at the non-bank businesses. The group became acquisitive from 2021, taking a 49% stake in a leading Vietnamese NBFI and 15% of its parent (VP Bank), 20% of RCBC of the Philippines, 74.9% of NBFI Fullerton India (now 100%), and 4.5% in US investment bank Jefferies (increasing to 15%), for the next stage of growth. Its high CET1 ratio has been whittled down by acquisitions. 9M24 results were boosted by share sales and structured investment trusts. Govt. support is assured. We see 10-15 bp of upside from current levels, and an improving credit trajectory.
Recommendation Reviewed: February 04, 2025
Recommendation Changed: January 27, 2025
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Search topics about wealth insights and investments.Mitsubishi UFJ Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 18 Mar 2025MUFG is the largest of Japan’s three megabanks, and has the most diversified operations by business line and geography. It has also been the most acquisitive until recently.
Core profitability had been weak due to Japan’s ultra-low interest rates and growth; that improved post an efficiency drive and a CEO change in April 2020; the bank has the best international margin and benefits from rising domestic interest rates.
Given its size and systemic importance, MUFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 18 Mar 2025- The 2 main banks of MUFG are MUFG Bank (earlier the Bank of Tokyo-Mitsubishi UFJ or BTMU) & Mitsubishi UFJ Trust & Banking. In the early stages of Japan's long banking crisis, Bank of Tokyo merged with Mitsubishi Bank, and in the late stages they absorbed UFJ (former Sanwa Bank & Tokai Bank) while Mitsubishi Trust absorbed Toyo Trust & Nippon Trust.
- The group includes consumer lenders Mitsubishi-UFJ NICOS & ACOM, and securities/IB joint ventures with Morgan Stanley. MUFG invested in Morgan Stanley in 2008 and now has a ~20% stake. In Dec-22, it completed the sale of its US retail and commercial bank, MUFG Union Bank, to US Bancorp.
- It has a majority stake in Thailand's Bank of Ayudhya (now Krungsri), 20% stakes in Vietnam's Vietinbank and Philippines' Security Bank, and 100% of Indonesia's Bank Danamon.
- In August 2019, it acquired Colonial First State from Commonwealth Bank of Australia to strengthen its global asset management business, in 2020 it invested $700 mn in SE Asia's Grab, and more recently has bought Home Credit's Philippine and Indonesian subsidiaries, Link (an Australian pension fund administrator), auto loan companies in Indonesia, Albacore Capital, StanChart's Indonesian retail operations, and an Indian NBFI.
Risk & Catalysts
AS OF 18 Mar 2025Its recent divisional performance has been strong, with the domestic businesses benefiting from higher JGB yields.
Total credit costs are running at JPY 251 bn in 9M24, of which JPY 203 bn is from overseas operations. As MUFG has budgeted for JPY 400 bn of credit costs this year, there could be some serious kitchen sinking in the coming quarter.
The group’s cost-income ratio was previously in the high 60’s a few years ago, but improved efficiency, the sale of MUFG Union Bank in the US, and better revenues has led to this ratio falling to 61% in FY23 and 58% in 9M24; the group targets a 60% cost-income ratio.
MUFG is exposed to Japanese equities through large unrealised gains, but has steadily been decreasing its shareholdings every year. It reduced the MTM impact of rising yields on its $ bond portfolio, as well as the potential impact on its JGB portfolio given the modifications to yield curve controls.
Key Metric
AS OF 18 Mar 2025| JPY bn | FY21 | FY22 | FY23 | 3Q23 | 3Q24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.57% | 0.79% | 0.64% | 0.63% | 0.73% |
| Operating Income/Average Assets | 1.11% | 1.22% | 1.12% | 1.27% | 1.39% |
| Operating Expense/Operating Income | 69% | 65% | 67% | 58% | 58% |
| Pre-Impairment Operating Profit / Average Assets | 0.34% | 0.43% | 0.48% | 0.50% | 0.60% |
| Impairment charge/Average Loans | (0.30%) | (0.61%) | (0.44%) | (0.31%) | (0.28%) |
| ROAA | 0.32% | 0.30% | 0.39% | 0.45% | 0.59% |
| ROAE | 6.7% | 6.5% | 8.1% | 9.6% | 11.7% |
| CET1 Ratio excluding unrealised securities gains in AOCI | 9.5% | 9.8% | 11.8% | n/a | n/a |
CreditSight View Comment
AS OF 15 Apr 2025MUFG is the largest of the megabanks with more diversified business lines. Digitalisation and operational efficiency improvements, in addition to higher rates in Japan and the US, has led to much better results in 9M24. Lending discipline has lifted international margins, which are now well higher than the other two. Its ~20% shareholding in Morgan Stanley has been a boon. Acquisitions have become more targeted. The CET1 ratio on a post Basel 3 basis ex security gains has the highest buffer (2.7%) compared to the other megabanks, its $ liquidity is also the best amongst its peers, and government support is assured. NPLs have jumped because of certain Americas exposure. Govt. support is assured.
Recommendation Reviewed: April 15, 2025
Recommendation Changed: January 27, 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 17 Mar 2025PLDT’s FY24 results were stable as expected; we see a modestly improving FY25 credit outlook aided by resilient EBITDA growth and residual PHP 11 bn of 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 17 Mar 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 17 Mar 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 17 Mar 2025| PHP bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 67.0% | 68.3% | 71.9% | 73.3% | 74.2% |
| Net Debt to Book Cap | 55.9% | 62.3% | 65.7% | 69.3% | 72.0% |
| Debt/Total Equity | 202.9% | 215.2% | 256.2% | 273.9% | 287.5% |
| Debt/Total Assets | 42.2% | 43.8% | 46.8% | 49.6% | 53.8% |
| Gross Leverage | 2.7x | 2.8x | 2.9x | 2.9x | 3.0x |
| Net Leverage | 2.2x | 2.6x | 2.7x | 2.8x | 2.9x |
| Interest Coverage | 7.8x | 8.1x | 7.4x | 6.5x | 6.1x |
| EBITDA Margin | 50.4% | 50.7% | 48.7% | 49.1% | 51.1% |
CreditSight View Comment
AS OF 17 Mar 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 provides a low spread pickup of just 4 bp wider versus the PLDT 2030. 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: March 17, 2025
Recommendation Changed: May 31, 2022
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Search topics about wealth insights and investments.Globe Telecom
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Telecommunications
- Country: Philippines
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Fundamental View
AS OF 17 Mar 2025Globe’s FY24 earnings grew modestly, with leverage metrics remaining stable. We believe credit metrics may improve modestly in FY25 as modest EBITDA growth, lower YoY capex, and residual tower sales closures through 1H25 are negated by sluggish revenues.
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 mid-2025.
While Globe earlier raised the upper end of its dividend policy, we expect dividend payouts to remain stable.
Business Description
AS OF 17 Mar 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 17 Mar 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 17 Mar 2025| PHP bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 67.2% | 69.4% | 67.5% | 69.7% | 70.2% |
| Net Debt to Book Cap | 59.4% | 63.0% | 63.7% | 66.6% | 66.4% |
| Debt/Total Equity | 204.5% | 227.2% | 208.1% | 230.5% | 235.8% |
| Debt/Total Assets | 49.8% | 56.7% | 57.1% | 60.3% | 62.4% |
| Gross Leverage | 2.2x | 3.3x | 3.9x | 4.3x | 4.4x |
| Net Leverage | 1.9x | 3.0x | 3.7x | 4.1x | 4.2x |
| Interest Coverage | 9.3x | 7.6x | 5.9x | 4.6x | 4.3x |
| EBITDA Margin | 48.7% | 46.7% | 46.7% | 47.7% | 49.7% |
CreditSight View Comment
AS OF 17 Mar 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: March 17, 2025
Recommendation Changed: June 18, 2024
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International Container Terminal Services Inc
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Fundamental View
AS OF 14 Mar 2025WFC is a leading domestic bank with strong positioning across consumer and commercial lending asset classes and a top 3 deposit market share in the U.S.
The core credit risk profile remains solid; the company has actively shed non-core assets and business lines (including WFAM), both as a means of managing under the Fed’s asset cap and part of new-ish CEO Scharf’s streamline strategy.
The balance sheet is strong, but WFC continues to suffer from internal deficiencies across a range of compliance and risk mgmt. functions unearthed after the fake account scandal. Positively, WFC has been closing out consent orders over the past 6-12 months and there is increased optimism the company could be released from the asset cap sometime in 2025.
Business Description
AS OF 14 Mar 2025- Wells Fargo ranks as the U.S.'s 4th largest bank by total assets ($1.93 tn at 4Q24) and 3rd largest by total deposits ($1.37 tn).
- Wells Fargo ranks 3rd in terms of U.S. deposits with approximately $1.41 tn in deposits at YE23 and 4,248 branches across the U.S. in 2024(S&P Capital IQ). The company has leading market shares across its geographically diverse footprint, including in California (#3), South Dakota (#2), Florida (#2), Texas (#3), Minnesota (#2), and Georgia (#3).
- Wells Fargo's major business lines include U.S. retail banking, mortgage banking, consumer finance, corporate and middle market banking, and wealth management.
Risk & Catalysts
AS OF 14 Mar 2025The asset cap and associated regulatory remediation remains a millstone with an unknown timeframe, though recent reporting has the cap being lifted in 2025. There was some risk that Wells could bleed share and franchise value in an economic recovery if the company cannot fully capture the business opportunity due to the asset cap, though so far that has not been the case given freed up balance sheet capacity earlier in 2020-22 and the sharp slowdown in loan growth since.
Wells Fargo faces reputational risk tied to those misconduct and business practices scandals, though likely fading with time and remediation progress; at 4Q24, WFC high-end estimable loss above legal accruals was $2 bn, unchanged sequentially.
Wells has less fee income diversification as peers, largely due to the much smaller scale of the capital markets businesses and smaller presence in credit cards, both points of emphasis under Scharf as Wells embarked on aggressive card product refreshes and trading buildout.
Key Metric
AS OF 14 Mar 2025| $ mn | FY20 | FY21 | FY22 | FY23 | 4Q24 |
|---|---|---|---|---|---|
| ROAE (annual) | 1.8% | 11.4% | 7.3% | 10.5% | 10.8% |
| ROAA (annual) | 0.17% | 1.11% | 0.70% | 1.00% | 1.02% |
| PPNR / Avg. Assets | 0.72% | 1.26% | 0.91% | n/m | 1.44% |
| Efficiency Ratio | 81% | 70% | 78% | n/m | 66% |
| Net Interest Margin (Annual) | 2.27% | 2.05% | 2.63% | 3.05% | 2.74% |
| Net charge-offs (LTM) / Loans | 0.34% | 0.18% | 0.17% | 0.37% | 0.52% |
| Common Dividend Payout | 152% | 11% | 32% | n/m | 26% |
| CET1 Ratio | 11.6% | 11.4% | 10.6% | 11.4% | 11.1% |
| Supplementary Leverage Ratio (SLR) | 8.1% | 6.9% | 6.9% | 7.1% | 6.7% |
| Liquidity Coverage Ratio (LCR) | 133% | 118% | 122% | 125% | 125% |
CreditSight View Comment
AS OF 15 Apr 2025Our move to an Outperform view in 4Q24 was predicated on spread value among Big 6 peers. Though unlikely to move spreads, when WFC is finally released from the asset cap (rumored for 2025) it will have credible claim to the best-in-class risk management and compliance framework, which has real value for bondholders and should reduce headline/noise risk going forward. Regulatory-driven supply risk has abated with BISIII delay and softening, but could still be a headwind as WFC will look to grow capital markets post-asset cap. The strong fundamental risk profile is highlighted by 11%+ CET1, improved/improving profitability, and the right strategic moves under CEO Scharf.
Recommendation Reviewed: April 15, 2025
Recommendation Changed: October 14, 2024
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BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 14 Mar 2025JPMorgan is one of the strongest and best positioned banks to navigate the current environment, with a well-diversified business model and good competitive positioning across a variety of lending and capital markets areas.
The company continues to deploy its considerable earnings power into reinvestment, specifically around technology where we are bullish on its ability to drive competitive advantages through strategic enhancements and efficiency gains.
Business Description
AS OF 14 Mar 2025- JPMorgan ranks as the largest U.S. bank by total assets ($4.0 tn at 4Q24) and deposits ($2.41 tn at 4Q24).
- JPMorgan ranks 1st in terms of U.S. deposits with approximately $2.08 tn in deposits at YE24 across 4,970 branches (S&P Capital IQ). JPMorgan's footprint includes New York (#1), Texas (#1), California (#2), Illinois (#1), Michigan (#1), Arizona (#1), Ohio (#5), and Florida (#4), among others.
- JPMorgan's major business lines include investment banking, retail banking, card services, treasury & securities services, commercial banking, and asset & wealth management.
Risk & Catalysts
AS OF 14 Mar 2025Succession planning at JPMorgan has a higher profile than many peers, with CEO Dimon (68 year-old) having held the top spot for over 15 years. Another recent round of shuffling top management yielded a little clarity, with Jennifer Piepsak taking herself out of the running and moving into the COO seat, with remaining candidates including Marianne Lake (CEO of Consumer), Troy Rohrbaugh (CEO of Commercial/Investment Bank), and Mary Erdoes (CEO of Asset/Wealth Management).
The sector remains exposed to reputational, legislative/administrative risk, and cyber threats, although the significant tech spend over the past few years should (theoretically) result in a stronger position for JPM to manage the security threats.
Although not likely a credit risk, JPMorgan may continue to be acquisitive around non-bank financial and ancillary services; but we would expect any deal to be conservatively funded and looking to further technology and fee income strategies (e.g. payments or asset management).
Key Metric
AS OF 14 Mar 2025| $ mn | FY20 | FY21 | FY22 | FY23 | 4Q24 |
|---|---|---|---|---|---|
| ROAE (annual) | 10.9% | 17.0% | 13.2% | 16.0% | 17.4% |
| ROAA (annual) | 0.9% | 1.3% | 1.0% | 1.3% | 1.4% |
| PPNR / Avg. Assets | 1.52% | 1.32% | 1.39% | n/m | 2.07% |
| Efficiency Ratio | 57% | 59% | 58% | n/m | 54% |
| Net Interest Margin (Annual) | 1.98% | 1.63% | 2.00% | 2.70% | 2.63% |
| Net charge-offs (LTM) / Loans | 0.52% | 0.26% | 0.25% | 0.48% | 0.63% |
| Common Dividend Payout | 38% | 24% | 32% | n/m | 24% |
| CET1 Ratio | 13.1% | 13.1% | 13.2% | 15.0% | 15.7% |
| Supplementary Leverage Ratio (SLR) | 6.9% | 5.4% | 5.6% | 6.1% | 6.1% |
| Liquidity Coverage Ratio (LCR) | 110% | 110% | 110% | 113% | 113% |
CreditSight View Comment
AS OF 14 Apr 2025Our Outperform view on JPM is all about defensive value: rightfully perceived as the industry bellwether, spread differentials among Big 6 peers have collapsed with investors now able to rotate into highest quality with only a nominal spread sacrifice. Defensive value has become more important given extreme policy uncertainty and we continue to like the value in JPM even after recent widening across IG and the bank peer group. Technicals may be mildly supportive, with larger JPM facing ~$25 bn in maturities/calls in FY25, below BAC with peer banks in the $21-22 bn range. Core credit strengths including capitalization may slide with the BISIII softening and delay, but from an extremely strong starting point.
Recommendation Reviewed: April 14, 2025
Recommendation Changed: December 05, 2024
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 11 Mar 2025UOB has strong stand-alone credit profile and benefits from the high likelihood of support from the government of Singapore, where it is one of the three major local banks.
The bank is more focused on Singapore and Southeast Asia than on Greater China; its traditional strengths are the SME and retail sectors, although its large corporate book is now over 60% of loans.
UOB has been conservatively managed with a sound risk profile, a strong focus on liquidity and a long track record of relatively good performance.
Business Description
AS OF 11 Mar 2025- UOB was established in 1935 as a Chinese family-owned bank catering to the Hokkien (Fujian) community, Singapore's largest Chinese ethnic sub-group. The Wee family owns about 18% of the shares. A further 5.18% is held by the Lien family which previously controlled Overseas Union Bank, which UOB merged within 2001. The Wee family has significant real estate and hospitality interests in Singapore and regionally.
- UOB's main markets are Singapore and Malaysia where its presence dates back to before Singapore's independence. It expanded through acquisitions in Thailand (Bank Radanasin and Bank of Asia) and Indonesia (Bank Buana), and more recently bought over Citi's consumer franchise in Malaysia, Thailand, Indonesia and Vietnam.
- Franchise strengths are in SME and consumer lending. Building & construction accounts for 27% of loans, followed by housing at 24%, financial institutions at 12% and general commerce at 11% at 4Q24.
- Loans by geography comprise Singapore at 49% of loans, Greater China at 15%, Malaysia at 10%, Thailand at 8%, and Indonesia at 3% at 4Q24.
Risk & Catalysts
AS OF 11 Mar 2025UOB has a greater focus on Southeast Asia than its Singapore bank peers, which leaves it open to more AQ risk in a downturn / high interest rate environment. However, both collateral and UOB’s SGD 2.7 bn in general provisions will be more than sufficient.
UOB’s NIM saw the largest impact from the US Fed’s rate cuts among the three Singapore banks, down 5 bp QoQ in 4Q24 to 2.00%, which was 15 bp lower than the other two. It was also the only Singapore bank to report a decline in net interest income in FY24.
The bank has benefited more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but surpassed the two peers by 4Q24.
Key Metric
AS OF 11 Mar 2025| SGD mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 1.19% | 1.23% | 1.31% | 1.52% | 1.51% |
| ROA | 0.69% | 0.92% | 0.99% | 1.19% | 1.19% |
| ROE | 7.4% | 10.2% | 11.9% | 14.2% | 13.7% |
| Equity to Assets | 9.5% | 9.3% | 8.6% | 8.8% | 9.2% |
| CET1 Ratio (fully-loaded) | 14.7% | 13.5% | 13.3% | 13.4% | 15.4% |
| NPL Ratio | 1.61% | 1.62% | 1.58% | 1.52% | 1.53% |
| Provisions / Loans | 0.57% | 0.20% | 0.20% | 0.25% | 0.27% |
| Liquidity Coverage Ratio | 135% | 133% | 147% | 158% | 148% |
| Net Stable Funding Ratio | 125% | 116% | 116% | 120% | 116% |
CreditSight View Comment
AS OF 09 May 2025UOB is conservatively run with a large family ownership and a sound balance sheet. The bank is more focused on Singapore and Southeast Asia than on Greater China. Outside Singapore, its main operations in ASEAN are in Thailand, Malaysia and Indonesia which collectively make up ~20% of its loan book. It acquired Citi’s consumer operations in Thailand, Malaysia, Indonesia and Vietnam, which has been good for the franchise. The bank has benefitted more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but now the three banks have similar CET 1 ratios. UOB’s reserve cover is about 50 ppt behind the other two peers.
Recommendation Reviewed: May 09, 2025
Recommendation Changed: July 04, 2017
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.UnionBank of the Philippines
- Sector: Financial Services
- Sub Sector: Banks
- Region: Philippines
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Fundamental View
AS OF 11 Mar 2025The bank has historically generated higher returns than peers, but it geared its focus significantly towards the retail segment through acquiring Citi’s Philippine retail portfolio in 2022 and organic growth, which brought retail loans to more than half the total book.
Returns have suffered despite the good boost to core revenues, as asset quality deterioration from the riskier growth direction resulted in high credit costs which we have forewarned. Continued rounds of capital infusions from shareholders have thus been required. The reserve cover is maintained relatively thin.
Business Description
AS OF 11 Mar 2025- UnionBank of the Philippines was incorporated in 1968, and listed on the Philippine Stock Exchange in June 1992. Principal shareholders are Aboitiz Equity Ventures (49.66%), Insular Life (16%), & Social Security System (18%).
- UBP undertook mergers with International Corporate Bank in 1994 and International Exchange Bank in 2006. City Savings Bank (a thrift bank) was purchased in Jan 2013. City Savings received merger approval with PR Savings (a bank engaged in motorcycle, agri-machinery, & teachers' salary loans) in Dec 2018 from the BSP. It acquired the Citi Philippines retail franchise in 2022.
- The loan book is broadly split 40% wholesale loans and 60% retail loans (comprising 33% credit cards, 22% mortgages, 33% salary loans and 12% others including teachers loans, salary loans and motorcycle loans by the thrift bank subsidiary, City Savings Bank, and 3% UnionDigital).
Risk & Catalysts
AS OF 11 Mar 2025Any rating downgrade of the Philippine sovereign or reduction of shareholding by Aboitiz Equity Ventures would negatively impact UBP.
The bank’s aggressive retail expansion has improved the NIM, but negatively impacted overall profitability because of high credit costs (particularly since 2H23) which we have forewarned. We continue to dislike its focus on riskier retail given the already large loan book exposure. It is now focusing on lower risk, shorter term loans at UnionDigital, as well as payroll and credit card loans, but the improvement in credit costs have been slow to come through.
The bank however benefits from good shareholder support; it successfully completed a third stock rights offering of PHP 10 bn in 2Q24 (2023: PHP 12 bn; 2022: PHP 40 bn) to shore up capital. Lower opex from 2Q24 onwards is also aiding the bottomline.
Key Metric
AS OF 11 Mar 2025| PHP mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.50% | 4.60% | 4.80% | 5.50% | 6.00% |
| Reported ROA (Cumulative) | 1.5% | 1.6% | 1.3% | 0.8% | 1.1% |
| Reported ROE (Cumulative) | 11.5% | 11.5% | 9.7% | 5.6% | 6.4% |
| PPP ROA | 2.68% | 2.59% | 2.17% | 2.31% | 3.08% |
| CET1 Ratio | 15.0% | 16.3% | 11.3% | 13.9% | 15.6% |
| Total Equity/Total Assets | 13.6% | 13.5% | 13.6% | 15.3% | 17.1% |
| Gross NPL Ratio | 5.10% | 5.00% | 4.80% | 6.27% | 6.89% |
| Net LDR | 64.3% | 63.1% | 67.4% | 73.8% | 77.3% |
| Liquidity Coverage Ratio | 207% | 272% | 148% | 163% | 250% |
| Net Stable Funding Ratio | 133% | 149% | 124% | 124% | 128% |
CreditSight View Comment
AS OF 13 Mar 2025UBP’s NIM and core revenue generation is strong thanks to its pivot towards higher yielding retail via organic growth and acquiring Citi’s local retail portfolio. However, returns have suffered as the asset quality repercussions which we have forewarned from its aggressive growth pace and riskier retail focus have come through, with elevated credit costs since 2H23. It has slowed loan growth but credit costs have not shown signs of stabilisation. The reserve cover is maintained relatively thin. Continued shareholder support with yet another stock rights offering in 2Q24 has ensured sufficient capital for now. Still, we maintain U/P as it trades tight for its size and risk, given its asset quality issues and weak fundamentals.
Recommendation Reviewed: March 13, 2025
Recommendation Changed: April 17, 2020
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group