BPI's profit growth predicted to slow sharply

Blame it on high base from trading gains.

According to Nomura, BPI has seen profits double from 2009-12F on the back of strong loan growth, large trading gains, subdued provisions and a falling tax rate. Net interest margins have been flat/down, while there has been a small improvement in fee income.

"Our concern is that profit growth may slow sharply given the high base from trading gains and an effective tax rate that rises from an artificially low level. Trading at 22x 2013F earnings (EPS of PHP4.79) and a P/B of 3.4x (BVPS of PHP30.3), the stock is expensive against its growth profile and profitability, in our view."