BPI shares fall on earnings, rate hike

By Isa Jane D. Acabal, Researcher

SHARES of Bank of the Philippine Islands (BPI) declined last week after softer first-quarter earnings and the Bangko Sentral ng Pilipinas’ (BSP) latest rate hike, with analysts citing concerns over near-term profitability and loan growth.

Investors also turned cautious after the bank signaled a guarded outlook amid the ongoing Middle East conflict, according to analysts.

Data from the Philippine Stock Exchange (PSE) showed BPI was the third most actively traded stock from April 20 to 24, with 21.52 million shares worth P2.07 billion changing hands.

The stock closed at P92.10 per share on Friday, down 7.2% from P99.20 the previous week. This was steeper than the financial sector’s 3.4% week-on-week decline and the 0.9% drop in the benchmark PSE index.

Year to date, BPI shares have fallen 20.7%, underperforming the financial sector’s 10.3% decline and the PSEi’s 1.8% drop.

Linncon M. Lahip, equity analyst at Regina Capital Development Corp., said the decline was driven by tempered first-quarter earnings, raising concerns about near-term profitability amid a more cautious operating outlook.

“Investor confidence weakened this week following BPI’s 1Q results, which likely came in lower than expected, and were released in the same week as the BSP’s rate hike,” he said in a Viber message.

“The combination prompted investors to reassess earnings expectations, as higher policy rates raised concerns over slower loan growth, higher funding costs, and potential pressure on asset quality despite near-term margin support,” he added.

In a press statement on April 20, BPI reported net income of P16.9 billion for the first quarter, up 1.7% from P16.6 billion a year earlier. The bank cited sustained loan portfolio expansion, wider net interest margins (NIMs), and stronger fee-based income.

Revenues rose 13.9% year on year to P50.9 billion, supported by a 13.7% increase in net interest income. Net interest margins expanded by seven basis points (bps) to 4.57%.

Total loans increased 13.5% year on year to P2.6 trillion, reflecting growth across its portfolio.

“On one hand, the 13.9% revenue growth to P50.9 billion is impressive, proving that the bank’s core business is still strong. However, the 1.7% year-on-year increase in net income despite such strong revenue growth suggests the bank is likely facing significantly higher operating expenses,” Jervin De Celis, equity trader at The First Resources Management and Securities Corp., said in an e-mail.

BPI’s operating expenses rose 15.8% year on year to P23.5 billion in the first quarter, driven by higher technology and manpower costs.

Mr. De Celis said that while revenues remained strong, inflationary pressures and geopolitical risks are “squeezing” the bank’s bottom line.

Meanwhile, Jash Matthew M. Baylon, equity analyst at The First Resources Management and Securities Corp., said “despite the stronger expansion of its loan portfolio and wider [NIMs], BPI’s net income is flat, as provisions increase while higher operating expense outpaced the growth of net interest income, as economic environment remains fragile.”

On April 23, the BSP raised the target reverse repurchase rate by 25 basis points to 4.5%, marking its first rate increase in more than two years.

“The BSP’s rate hike is initially supportive of BPI’s earnings, as loan yields generally reprice faster than deposits, helping sustain net interest margins given its strong CASA (Current Account and Savings Account) base,” Mr. Lahip said.

However, higher borrowing costs may dampen loan demand over the medium term, potentially slowing growth, he added.

“The same dynamic applies to other listed banks; institutions with strong CASA franchises and sound asset quality are better positioned to benefit from margin expansion, while those with weaker funding bases may face slower loan growth and higher credit risk, leading to more cautious earnings across the sector,” Mr. Lahip said.

Mr. De Celis said the BSP’s policy rate hike is “generally accretive” to BPI’s NIM in the medium term.

“As interest rates rise, BPI can reprice its loan portfolio faster than its deposit costs increase,” he said.

“Other listed banks will also see NIM expansion, but those with higher reliance on expensive time deposits may see their margins lag behind BPI’s. If rates stay high or rise further in 2026 to combat the Middle East-induced inflation, the borrowers’ debt-servicing capacity could weaken and may lead to higher nonperforming loans (NPLs),” he added.

He expects BPI to maintain an NIM of about 4.2% to 4.4% this year.

Analysts also cited the ongoing Middle East conflict as weighing on investor sentiment.

“Investors are concerned that sustained high energy costs will fuel second-round effects on inflation which can potentially force the BSP to remain hawkish for the remainder of 2026. This overshadows the bank’s strong core revenue growth,” Mr. De Celis said.

Mr. Baylon said geopolitical tensions in the Middle East have dampened investor confidence, as reflected in persistent net foreign outflows.

At its annual stockholders’ meeting on April 20, BPI President and Chief Executive Officer Jose Teodoro K. Limcaoco said the bank would adopt a more cautious stance as it monitors economic conditions amid the ongoing Middle East conflict.

BPI Head of Consumer Banking and Executive Vice-President Maria Cristina L. Go said the bank would tighten its credit standards.

Mr. De Celis said the bank’s move to tighten lending parameters and adopt a cautious outlook suggested that loan growth may slow in the coming quarters, shifting sentiment toward a more defensive stance.

“When a bank as big as BPI signals a need to protect its balance sheet, it often triggers a temporary de-risking phase or affects the company’s stock performance,” he said.

Mr. Lahip said the market viewed BPI’s stance as “prudent risk management amid Middle East uncertainty and its potential economic spillovers.”

“The tightening of credit standards was also seen as a response to rising industry NPLs, signaling a focus on asset quality over short-term growth, which helped limit downside sentiment despite a broader risk-off backdrop,” he said.

In the coming weeks, Mr. Lahip said investors should monitor geopolitical and macroeconomic developments, citing banks’ sensitivity to interest rate changes and economic conditions.

For the second quarter, Mr. De Celis forecast BPI’s net profit at around P17.5 billion, and full-year 2026 at P71.2 billion.

“This forecast assumes that the bank’s tightened credit standards will successfully keep NPLs manageable despite the 4.5% policy rate,” he said.

Mr. Lahip sees immediate support for the stock at P91 and resistance at P96, while Mr. Baylon placed support at P92.50 and resistance at P105.

Mr. De Celis set near-term support at P90 and resistance at P95.50.

“Even if the stock manages a relief rally, it will face heavy selling pressure here as trapped investors from earlier in the week look to exit at break-even prices,” he added.