The bank's credit cost is expected to be 41bps in FY17.
In terms of asset quality, the banks’ NPL ratio continued to improve to 1.5% in 1Q17 from 1.7% in 1Q16. Likewise, NPL cover rose to 123.7% from 114.2%. With this improvement, analysts at Maybank Kim Eng assume BPI’s credit cost will be 41bps/36bps in FY17/18F, slightly lower than the 46bps in FY16.
"Meanwhile, management is still looking at mid-teen loan growth despite posting a 19.9% YoY increase in 1Q17. This suggests potential slowdown in succeeding quarters as it preserves capital. We estimate the bank utilises ~80bps of CET1 annually. At this pace, capital-raising may be stretched to end-2018. We estimate that its parent’s CET1 of 11.27% in 1Q17 can continue to support loan growth of 16.5% in FY17F and 16.9% in FY18F," added Maybank Kim Eng.
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