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Indicative Year-to-Maturity: 4.26%
BDO Unibank
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: BDOPM 4.375 30
- Indicative Yield-to-Maturity (YTM): 4.26%
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Fundamental View
AS OF 03 Mar 2026BDO Unibank (BDO) is the largest bank in the Philippines in terms of assets & market share.
Given its size and systemic importance, BDO is considered too big to fail and is strongly likely to be supported by its controlling shareholder SM Investments, as well as the Philippine government in times of stress.
BDO is widely viewed as the soundest bank in the country given its strong fundamentals, well-diversified businesses, and good management.
Business Description
AS OF 03 Mar 2026- BDO Unibank was established as Acme Savings Bank in 1968, and was then acquired by SM Investments in 1976. It became a commercial bank in 1994 and a universal bank in 1996.
- BDO was listed in May 2002. SM Investments remains the bank's largest shareholder with a 41% stake.
- BDO has expanded through a series of M&As. Among its key transactions, it merged with Dao Heng Bank Philippines in 2001, Banco Santander Philippines in 2003, UOB Philippines in 2005, Equitable PCI Bank in 2007, GE Money Bank in 2009, Citibank Savings, DB Trust and Real Bank in 2014, One Network Bank in 2015 (the largest rural bank in the Philippines), and RB Pandi's banking business in 2019. It also acquired the insurance business of Generali in the Philippines in 2016.
- BDO has the largest distribution network in the country and is ranked the largest bank in terms of consolidated resources, total assets, loans, deposits and trust funds under management.
- Its loan book was split 49% large corporates, 26% middle market, and 25% consumer at 4Q25. 39% of the consumer book comprised mortgages, 31% credit cards, 13% auto loans and the remaining personal loans (13%) and others (5%).
Risk & Catalysts
AS OF 03 Mar 2026Direct impact from US tariffs is limited given that the Philippines is not a major goods exporter, but there is likely to be some second order effects from a slowdown in regional and global growth.
The recent public infrastructure graft scandal has dampened public infra spending, consumer and business sentiment, and private investment, which will weigh on GDP and corporate loan growth at least through 1H26. A prolonged hit to sentiment would exacerbate these effects and strain asset quality. BSP rate cuts to support growth will pressure the NIM, but this is being mitigated by a loan mix shift towards retail.
We see few asset quality risks for BDO given a comfortable NPL cover and an acceptable CET1 ratio, as well as BDO’s large corporates book (~50% of total loans) and good underwriting track record.
Any rating downgrade of the Philippine sovereign would negatively impact BDO.
Key Metric
AS OF 03 Mar 2026| PHP mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| NIM | 4.05% | 4.14% | 4.37% | 4.35% | 4.31% |
| Reported ROA (Cumulative) | 1.2% | 1.5% | 1.7% | 1.8% | 1.7% |
| Reported ROE (Cumulative) | 10.4% | 13.0% | 15.2% | 15.1% | 14.4% |
| Equity/Assets | 11.7% | 11.3% | 11.5% | 11.8% | 11.8% |
| CET1 Ratio | 13.6% | 13.4% | 13.8% | 14.1% | 13.8% |
| NPL ratio | 2.8% | 2.0% | 1.9% | 1.8% | 1.7% |
| Provisions/Loans | 0.72% | 0.64% | 0.59% | 0.46% | 0.43% |
| PPP ROA | 2.1% | 2.3% | 2.7% | 2.5% | 2.4% |
| Liquidity Coverage Ratio | 145% | 141% | 123% | 132% | 121% |
| Net Stable Funding Ratio | 124% | 124% | 124% | 122% | 118% |
CreditSights View
AS OF 06 Mar 2026BDO is the largest bank in the Philippines. Management is well-regarded, the business is well-diversified and it is the market leader in many business lines. The NIM has peaked with the turn in policy rates, but non-interest income is close to a third of operating income given good fee generation and overall core profitability is strong. We remain comfortable with BDO given the large corporate book and comfortable NPL cover, as well as underwriting track record, which provide comfort around the recently robust growth in retail loans. Capital is also acceptable with the CET1 ratio at 13.8%. However, we have BDO on Underperform from an RV standpoint.
Recommendation Reviewed: March 06, 2026
Recommendation Changed: January 07, 2026
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Fundamental View
AS OF 02 Jan 2026We shift SK Hynix back to Market perform from Outperform following its strong 3Q25 results; the company reported an acceleration in topline growth thanks to an improvement in DRAM and NAND pricing, as well as strong DRAM shipments, higher EBITDA margin on a better product mix, free operating cash flow expansion, and it turned net cash during the quarter. We remain constructive on SK Hynix credit outlook for the next 15 months, and expect the company to further expand its net cash position. That said, we think its current spreads have priced in its constructive credit outlook and positive rating agencies by all three rating agencies, as it now trades tighter than Asia BBB+ corporates and Micron.
Business Description
AS OF 02 Jan 2026- SK Hynix is one of the world’s largest memory semiconductor companies. As an Integrated Device Manufacturer (IDM), it engages in the design, manufacturing and sale of advanced memory semiconductors. It derives 78% of 3Q25 revenues from the sale of DRAM (dynamic random-access memory), 20% from NAND Flash, and the remaining 2% from CMOS Image Sensors and foundry services. The company's products are essential to a wide range of electronic devices, including PCs, servers, graphic cards, and mobile devices.
- SK Hynix holds the largest global market share (3Q25: 34%) in DRAM and second largest in NAND Flash (3Q25: 22%).
- SK Hynix is a member of SK Group, South Korea's second largest conglomerate by asset, and is 20.1%-owned by SK Square.
- The company has manufacturing facilities located in (1) South Korea — Icheon (DRAM, NAND), and Cheongju (NAND); and (2) China — Wuxi (DRAM), Dalian (NAND); and packaging & testing facilities in Chongqing, China.
- SK Hynix had a market capitalization of KRW 494.3 tn as of 2 Jan 2026.
Risk & Catalysts
AS OF 02 Jan 2026The memory sector is subjected to significant boom/bust cycles, leading to volatility in its revenue and EBITDA margin. During an upcycle, memory vendors typically expand capacity to meet strong end-demand from PC, smartphones, and servers; however, the long-lead time for new plants could result in an oversupply when end-demand is tapering off.
Capex intensity (as % of revenues) and R&D costs are elevated even in downcycles for SK Hynix, as it needs to maintain technological leadership and fast evolving product requirements from customers.
SK Hynix has large production and revenue exposure to China; rising US-China tension and restrictive US chip exports to China could destabilize the long-term prospect of its China production and weigh on its $ bonds. Though, in Oct-23 SK Hynix was designated as a “Validated End User” by the US government, which gave it an indefinite waiver for importing US chip gears to their Chinese plants.
SK Hynix may be vulnerable to US tariff risk; the company derived 71% of 3Q25 revenues from the US.
Key Metric
AS OF 02 Jan 2026| KRW bn | FY21 | FY22 | FY23 | FY24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 23.5% | 28.1% | 37.8% | 25.6% | 21.0% |
| Net Debt to Book Cap | 13.3% | 21.2% | 27.7% | 11.6% | (0.8%) |
| Debt/Total Equity | 30.8% | 39.2% | 60.7% | 34.4% | 26.6% |
| Debt/Total Assets | 19.9% | 23.9% | 32.4% | 21.2% | 17.9% |
| Gross Leverage | 0.8x | 1.2x | 5.8x | 0.7x | 0.6x |
| Net Leverage | 0.5x | 0.9x | 4.3x | 0.3x | 0.0x |
| Interest Coverage | 87.3x | 38.7x | 3.8x | 26.5x | 48.4x |
| EBITDA Margin | 52.8% | 46.2% | 17.1% | 53.8% | 56.1% |
CreditSight View Comment
AS OF 30 Jan 2026We maintain our M/P recc on HYUELE post its robust 4Q25 results; topline growth accelerated, EBITDA margin surged YoY thanks to higher ASP, which led to its higher FOCF; debt metrics improved and HYUELE deepened its net cash position. We expect HYUELE’s debt metrics to further improve in FY26 with a deeper net cash position; this is supported by an acceleration in topline growth on the back of higher ASP and robust demand for server-related products, which should also drive stronger EBITDA margin and FOCF. We maintain our expectations for S&P and Fitch to upgrade HYUELE over the next 12 months. We think its current spreads have priced in our constructive outlook on the company; it currently trades 5 bp tighter Asia BBB corp and only 5 bp wider than Asia A- corp; we prefer its 2033 bond.
Recommendation Reviewed: January 30, 2026
Recommendation Changed: October 29, 2025
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