BPI shares dip on profit taking, NPL concerns

SHARES of Bank of the Philippine Islands (BPI) edged lower last week after the release of its first-quarter (Q1) financial results, as investors engaged in profit taking following the stock’s recent rally, while concerns over an uptick in nonperforming loans (NPLs) dampened investor sentiment.

Data from the Philippine Stock Exchange (PSE) showed that BPI was the fourth most traded stock last week, with 9.49 million shares worth P1.32 billion changing hands.

The Ayala-led bank’s share price declined by 0.7% week on week to P135.90 apiece on Friday from P136.80 on May 9. The drop was smaller than the 2.8% contraction in the financial sector index but contrasted with the 0.1% gain in the benchmark PSE index during the same period.

Year to date, BPI shares have risen by 11.4%.

The market was closed on Monday for the Philippine general election.

“BPI rallied ahead of its first-quarter earnings on strong expectations but pulled back after the results due to profit taking and concerns over higher NPLs, softer margins, and moderate loan growth despite profit rise,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

BPI reported a 9% year-on-year increase in attributable net income to P16.64 billion in the first quarter from P15.26 billion in the same period last year.

Ralph Jonathan B. Fausto, research associate at China Bank Securities Corp., said the stock’s price action during the week was driven by “broad-market profit taking as most big banks saw particular strength in recent weeks — making them vulnerable to profit taking.”

The stock saw a sharp drop on Thursday, closing at its weekly low of P135 from a week-high close of P141 on Monday.

“We may have also seen some reactive moves to prospects of more rate cuts through the year, which would provide downward pressure on lending margins,” Mr. Fausto said in an e-mail message.

The Monetary Board resumed its easing cycle with a 25-basis-point cut in April, bringing cumulative cuts to 100 basis points since August last year.

“For now, we think we will have completed the easing cycle in 2025,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said.

“A possible risk is that we begin to see a hard landing, and then we’ll have to cut by more than 2025. But 2027 is still too far away.”

Juan Alfonso G. Teodoro, an equity research analyst at Timson Securities, Inc., said the broader market was affected by “weaker-than-expected gross domestic product (GDP) numbers, so investor sentiment turned a bit cautious.”

Data from the Philippine Statistics Authority showed that GDP expanded by 5.4% in the first quarter, below the government’s 6-8% target for the year.

“BPI’s strategic focus on the high-yielding non-institutional loan segment is anticipated to support its loan growth targets and provide cushion against margin compression amid an easing interest rate environment,” Mr. Fausto added.

BPI’s nonperforming loan ratio stood at 2.26% in the first quarter.

“It’s technically not a huge red flag yet since they’ve got good coverage, but it’s something investors are watching,” Mr. Teodoro said. “If they can keep the strong income growth while managing those risks, the stock could perform well in Q2.”

Mr. Limlingan added that the shift to non-institutional loans “should boost margins but raises credit risk.”

For the second quarter, Mr. Teodoro forecasts BPI’s earnings at approximately P16.18 billion, contributing to their full-year projection of P72.46 billion.

“I wouldn’t be surprised to see some consolidation or sideways movement,” Mr. Teodoro said. “But if you zoom out, BPI’s fundamentals are still solid and technically it still looks strong, so any pullbacks could actually be good entry points for longer-term investors.”

Mr. Fausto identified key external factors to monitor, including “the trajectory and outlook for US inflation and Fed’s policy stance amid tariff uncertainties, as they may influence businesses’ appetite for credit.”

US President Donald J. Trump temporarily deferred the implementation of higher tariffs for a 90-day period beginning April 9, instituting instead a uniform 10% blanket tariff rate until July.

Mr. Fausto places support at P132.30 and resistance around P142.50-P143.90.

Mr. Limlingan sees support levels at P134 and P130, while resistance sits at P140 and P143.

Mr. Teodoro set short-term support at P132.50-P134 and resistance at P143-P145, adding a long-term resistance level at P150.

“BPI’s fundamentals are still solid and technically it still looks strong, so any pullbacks could actually be good entry points for longer-term investors,” Mr. Teodoro said. — Pierce Oel A. Montalvo