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Archives: CreditSights Issuer List
UnionBank of the Philippines
- Sector: Financial Services
- Sub Sector: Banks
- Region: Philippines
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Fundamental View
AS OF 19 May 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 19 May 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 38% wholesale loans and 62% retail loans (comprising 34% credit cards, 21% mortgages and 7% salary loans at the parent, 36% teachers loans, salary loans and motorcycle loans by the thrift bank subsidiary, City Savings Bank, and 1% UnionDigital) at Mar-25.
Risk & Catalysts
AS OF 19 May 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, but the improvement in credit costs have been slow to come through given fallout from higher risk taking in other segments.
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 19 May 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.60% | 4.80% | 5.50% | 6.00% | 6.30% |
| Reported ROA (Cumulative) | 1.6% | 1.3% | 0.8% | 1.1% | 0.5% |
| Reported ROE (Cumulative) | 11.5% | 9.7% | 5.6% | 6.4% | 2.9% |
| PPP ROA | 2.59% | 2.17% | 2.31% | 3.08% | 2.74% |
| CET1 Ratio | 16.3% | 11.3% | 13.9% | 15.6% | 14.9% |
| Total Equity/Total Assets | 13.5% | 13.6% | 15.3% | 17.1% | 16.8% |
| Gross NPL Ratio | 5.00% | 4.80% | 6.27% | 6.89% | 6.90% |
| Net LDR | 63.1% | 67.4% | 73.8% | 77.3% | 74.6% |
| Liquidity Coverage Ratio | 272% | 148% | 163% | 250% | n/m |
| Net Stable Funding Ratio | 149% | 124% | 124% | 128% | n/m |
CreditSight View Comment
AS OF 21 May 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 strategy towards the risky retail segments have come through, with elevated credit costs since 2H23. It has slowed loan growth but credit costs have not shown signs of stabilisation given a still high appetite for risk. 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: May 21, 2025
Recommendation Changed: April 17, 2020
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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 19 May 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 19 May 2025- SMC GP is a leading power generation and distribution company in the Philippines. As at 31 December 2021, its total generation capacity stood 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 19 May 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 19 May 2025| PHP bn | FY22 | FY23 | FY24 | 1Q24 | 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 69.2% | 62.8% | 64.4% | 63.0% | 61.1% |
| Net Debt to Book Cap | 66.4% | 59.4% | 57.7% | 59.1% | 53.2% |
| Debt/Total Equity | 224.6% | 168.7% | 181.2% | 170.0% | 157.4% |
| Debt/Total Assets | 79.0% | 73.8% | 73.8% | 72.7% | 75.3% |
| Gross Leverage | 19.4x | 12.9x | 11.9x | 12.6x | 10.8x |
| Net Leverage | 18.6x | 12.2x | 10.7x | 11.8x | 9.4x |
| Interest Coverage | 1.4x | 2.2x | 2.3x | 2.2x | 2.4x |
| EBITDA Margin | 13.2% | 26.4% | 26.6% | 27.3% | 34.4% |
CreditSight View Comment
AS OF 23 Jul 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: July 23, 2025
Recommendation Changed: September 09, 2024
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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 19 May 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 19 May 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 19 May 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 19 May 2025| PHP bn | FY22 | FY23 | FY24 | 1Q24 | 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.3% | 74.2% | 74.1% | 74.3% |
| Net Debt to Book Cap | 65.7% | 69.3% | 72.0% | 70.7% | 71.2% |
| Debt/Total Equity | 256.2% | 273.9% | 287.5% | 286.6% | 288.4% |
| Debt/Total Assets | 46.8% | 49.6% | 53.8% | 49.0% | 53.8% |
| Gross Leverage | 2.9x | 2.9x | 3.0x | 2.9x | 3.0x |
| Net Leverage | 2.7x | 2.8x | 2.9x | 2.7x | 2.9x |
| Interest Coverage | 7.4x | 6.5x | 6.1x | 6.4x | 5.9x |
| EBITDA Margin | 48.7% | 49.1% | 51.1% | 52.0% | 51.7% |
CreditSight View Comment
AS OF 23 Jul 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: July 23, 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 15 May 2025- Globe’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 15 May 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 15 May 2025- Globe 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 15 May 2025| PHP bn | FY22 | FY23 | FY24 | 1Q24 | 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 67.5% | 69.7% | 70.2% | 69.6% | 69.5% |
| Net Debt to Book Cap | 63.7% | 66.6% | 66.4% | 66.4% | 66.2% |
| Debt/Total Equity | 208.1% | 230.5% | 235.8% | 229.1% | 227.9% |
| Debt/Total Assets | 57.1% | 60.3% | 62.4% | 60.0% | 61.4% |
| Gross Leverage | 3.9x | 4.3x | 4.4x | 4.3x | 4.4x |
| Net Leverage | 3.7x | 4.1x | 4.2x | 4.1x | 4.2x |
| Interest Coverage | 5.9x | 4.6x | 4.3x | 4.4x | 4.2x |
| EBITDA Margin | 46.7% | 47.7% | 49.7% | 49.4% | 49.9% |
CreditSight View Comment
AS OF 23 Jul 2025Globe Telecom (GLO PM) is a leading telecommunications operator in the Philippines, maintaining a dominant market share in mobile data, voice, and SMS services. While facing competitive pressures from DITO and PLDT, its strong market position and DITO’s slowing expansion mitigate these challenges. Globe’s financial performance shows modest earnings growth and stable leverage metrics, with expected improvements in credit metrics for full year 2025 due to EBITDA growth, lower capital expenditure, and tower sales. The company’s Credit Quality Score (CQS) is 38, with a stable outlook as of July 21, 2025. Despite risks from heavy capital expenditure and consistent dividend payouts, Globe’s established market presence and strategic financial management contribute to continued stability.
Recommendation Reviewed: July 23, 2025
Recommendation Changed: June 18, 2024
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Fundamental View
AS OF 15 May 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 15 May 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 15 May 2025UOB has a greater focus on Southeast Asia than its Singapore bank peers, which leaves it open to more asset quality risk in a downturn / high interest rate environment.
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 now aligns with peers.
Its NPL coverage ratio of 90% is around 50-70 ppt behind peers. However, both collateral and UOB’s SGD 2.8 bn in general provisions will be more than sufficient.
Key Metric
AS OF 15 May 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 1.23% | 1.31% | 1.52% | 1.51% | 1.56% |
| ROA | 0.92% | 0.99% | 1.19% | 1.19% | 1.11% |
| ROE | 10.2% | 11.9% | 14.2% | 13.7% | 12.3% |
| Equity to Assets | 9.3% | 8.6% | 8.8% | 9.2% | 9.6% |
| CET1 Ratio (fully-loaded) | 13.5% | 13.3% | 13.4% | 15.4% | 15.4% |
| NPL Ratio | 1.62% | 1.58% | 1.52% | 1.53% | 1.60% |
| Provisions / Loans | 0.20% | 0.20% | 0.25% | 0.27% | 0.35% |
| Liquidity Coverage Ratio | 133% | 147% | 158% | 143% | 143% |
| Net Stable Funding Ratio | 116% | 116% | 120% | 116% | 116% |
CreditSight View Comment
AS OF 08 Aug 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 50-70 ppt behind the other two peers.
Recommendation Reviewed: August 08, 2025
Recommendation Changed: July 04, 2017
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Fundamental View
AS OF 14 May 2025DBS Group has sound standalone fundamentals and benefits from its strong home country. Support may be stronger than peers thanks to its longstanding relationship with the government and Temasek’s ~29% stake.
DBS is a major player in Asian corporate banking, and also has strengths in mass market and private banking. It is also one of Asia’s leading digital banks. Acquisitions have been skillfully handled in the past decade or so.
DBS has performed well in recent years, with a high RoE, and its asset quality has been more resilient than that at UOB and OCBC.
Business Description
AS OF 14 May 2025- DBS was established in 1968 as a development bank but was subsequently privatised and is now commercially run. The Singapore government retains an indirect stake through its investment vehicle, Temasek (~29%).
- In 1998, DBS moved beyond its wholesale bank origins with the acquisition of POSB that brought along a large mass market customer and deposit base. In 2001, it acquired the former Dao Heng Bank in Hong Kong and in 2008, it acquired a part of the failed Bowa Bank in Taiwan, to supplement its Greater China operations. It also regularly acquired wealth management businesses, such as SocGen's Asian private banking business in 2014 and ANZ's Asian retail and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia in 2018. Recent acquisitions include Lakshmi Vilas Bank in India, a 16.69% stake in China's Shenzhen Rural Commercial Bank, and Citi's consumer business in Taiwan. The bank is also reportedly considering expanding into Malaysia by purchasing Temasek's 29.1% stake in Alliance Bank Malaysia Bhd.
- As of YE24, Singapore accounted for 45% of its loan book, with HK (14%), Rest of Greater China (13%), South & Southeast Asia (8%) and Rest of the World (19%) accounting for the rest.
- The bank is well regarded as a digital leader in the banking space, and has steadily built capabilities in private banking and markets businesses.
Risk & Catalysts
AS OF 14 May 2025Loan growth has been a recent challenge, with ongoing high repayments in Greater China and potential impact from tariffs.
Asset quality has outperformed the other two Singapore majors with very low credit costs.
The bank encountered some operational issues recently. On 30 April 2024, the MAS removed its restriction on DBS’s non-essential activities, which had been imposed in Nov-23 following IT failures. Its retail payments system had another outage on 2 May 2024.
Non-interest income performance was very strong in FY24, establishing a high baseline for FY25. WM fee income growth remained strong in 1Q25.
Key Metric
AS OF 14 May 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 1.14% | 1.32% | 1.60% | 1.69% | 1.77% |
| ROA | 1.0% | 1.1% | 1.4% | 1.5% | 1.4% |
| ROE | 12.5% | 15.0% | 18.0% | 18.0% | 17.3% |
| Equity/Assets | 8.38% | 7.65% | 8.40% | 8.32% | 8.17% |
| CET1 Ratio (fully loaded) | 14.4% | 14.6% | 14.6% | 15.1% | 15.2% |
| NPL Ratio | 1.27% | 1.13% | 1.11% | 1.09% | 1.10% |
| Provisions / Loans | 0.01% | 0.06% | 0.14% | 0.14% | 0.28% |
| Liquidity Coverage Ratio | 135% | 146% | 144% | 147% | 145% |
| Net Stable Funding Ratio | 123% | 117% | 118% | 115% | 115% |
CreditSight View Comment
AS OF 08 Aug 2025DBS performed well for several years under CEO Piyush Gupta, who was succeeded by Ms. Tan Su Shan in March 2025. It has comfortable capital and well managed liquidity. Temasek is the main shareholder. DBS has grown its various businesses sensibly and has been a leading bank for adopting digital technology, recent technology outages notwithstanding. It has also steadily grown its fee income and its regional businesses. WM and transaction banking have been focuses, with bolt-on acquisitions/stakes in private banking and Asian retail banking, more recently in India (Lakshmi Vilas Bank), China (SZRCB) and Taiwan (Citi consumer business). It delivered record high FY4 profits and 1H25 results were peer-leading. Credit costs are very low.
Recommendation Reviewed: August 08, 2025
Recommendation Changed: June 03, 2016
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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): 4.41%
- Credit Rating : BBB
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Fundamental View
AS OF 14 May 2025- Bank 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 May 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.
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- 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 71% of its loan book outstanding to corporates, and the balance to MSME and retail as of 1Q25. The bank's target is to grow the MSME and retail segment to a 30% share of loans.
Risk & Catalysts
AS OF 14 May 2025- Any 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 particularly as some businesses put borrowing plans on hold.
- BPI’s strong focus on unsecured retail and MSME growth has put pressure on asset quality, and provision reserves have also been pared down. We see asset quality risks, but BPI’s large corporates-focused book (71% of total loans) provide comfort and provisioning capacity is strong.
- We also expect increased margin pressure with more rate cuts anticipated from the BSP now in 2025 to support growth. However, management expects to maintain a flattish FY25 NIM, supported by RRR reductions and a continued pivot towards better yielding retail/MSME.
Key Metric
AS OF 14 May 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 2.01% | 2.41% | 2.52% | 2.78% | 2.96% |
| Reported ROA (Cumulative) | 1.10% | 1.59% | 1.93% | 1.98% | 2.05% |
| Reported ROE (Cumulative) | 8.4% | 13.1% | 15.4% | 15.1% | 15.4% |
| Net Interest Margin | 3.30% | 3.59% | 4.09% | 4.31% | 4.49% |
| CET1 Ratio | 15.8% | 15.1% | 15.3% | 13.9% | 14.7% |
| Total Equity/Total Assets | 12.1% | 12.2% | 12.4% | 13.0% | 13.7% |
| NPL Ratio | 2.49% | 1.76% | 1.84% | 2.13% | 2.26% |
| Provisions/Loans | 0.91% | 0.58% | 0.22% | 0.32% | 0.53% |
| Liquidity Coverage Ratio | 221% | 195% | 207% | 159% | n/m |
| Net Stable Funding Ratio | 155% | 149% | 154% | 146% | n/m |
Our View
AS OF 21 May 2025Despite the heightened risk associated with growth in non-wholesale loans, BPI continues to demonstrate strong liquidity, a well-managed corporate loan portfolio (which accounts for 73% of total loans), and a solid underwriting track record. With adequate provisioning and a robust capital position, the bank remains a stable and dependable option for bond investors.
Recommendation Reviewed: May 21, 2025
Recommendation Changed: May 21, 2025
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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 07 May 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 07 May 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 32 port concessions in 19 countries. As of end-FY23, ICTSI's revenues are well diversified across the Philippines (27% of total), Other Asia (14%), EMEA (20%) and the Americas (39%).
- 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 07 May 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 07 May 2025| $ mn | FY22 | FY23 | FY24 | 1Q24 | 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.0% | 70.1% | 77.0% | 76.3% |
| Net Debt to Book Cap | 58.2% | 61.0% | 52.6% | 60.2% | 63.1% |
| Debt/Total Equity | 255.3% | 269.9% | 233.9% | 334.1% | 321.4% |
| Debt/Total Assets | 62.5% | 60.3% | 58.2% | 63.7% | 59.1% |
| Gross Leverage | 3.1x | 2.9x | 2.5x | 3.1x | 2.3x |
| Net Leverage | 2.5x | 2.4x | 1.9x | 2.4x | 1.9x |
| Interest Coverage | 4.6x | 4.4x | 4.9x | 4.5x | 5.1x |
| EBITDA Margin | 62.8% | 63.0% | 65.0% | 64.9% | 65.7% |
CreditSight View Comment
AS OF 23 Jul 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: July 23, 2025
Recommendation Changed: August 16, 2023
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Search topics about wealth insights and investments.Republic of the Philippines
- Country: Philippines
- Bond: PHILIP 3.625 32RDB 5.75 29
- Indicative Yield-to-Maturity (YTM): 3.38%4.44%
- Credit Rating : Baa2/BBB/BBB
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Country Overview
AS OF 02 May 2025- The Philippines is one of the fastest-growing emerging market economies, though GDP per capita remains relatively low at USD 3,870 per year, comparable to Egypt.
- Key economic drivers include business process outsourcing (BPO) and tourism, alongside a manufacturing sector specializing in electronics, automotive production, and food processing.
- While the country has limited natural resources, it is a significant global supplier of nickel ore.
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How may we help you?
Search topics about wealth insights and investments.Jollibee Foods
- Bond: JFCPM 5.332 30
- Indicative Yield-to-Maturity (YTM): 4.77%
- Credit Rating : Unrated
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Fundamental View
AS OF 08 Apr 2025- Largest QSR Operator in the Philippines: JFC dominates the local fast-food market and continues to expand globally with brands like Jollibee, Chowking, Greenwich, and The Coffee Bean & Tea Leaf.
- Diversified Revenue Streams: Operates a mix of company-owned and franchised stores across multiple markets, reducing reliance on any single region.
- Strong Brand Equity: Maintains a loyal customer base with localized menu offerings and aggressive international expansion in North America, Europe, the Middle East, and Asia.
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