Borrowing costs

Bull market on BPI as borrowing costs rise


INVESTORS remain positive on Ayala-led Bank of the Philippine Islands (BPI) as it stands to benefit from rising borrowing costs.

Data from the Philippine Stock Exchange showed that a total of 1.887 billion pesos out of 19.340 million BPI shares were traded from May 30 to June 3, making it the ninth most actively traded issue that week. .

Shares of the fourth-largest universal and commercial bank by total assets ended at P95.00 each on Friday, down 0.6% on a week from the May 27 close of P95.60 . BPI has gained 4.3% since the 91.05P end on the first trading day of the year.

Analysts said banks like BPI could see a boost in revenue after Bangko Sentral ng Pilipinas (BSP) last month raised benchmark rates for the first time since November 2018 by 25 basis points (bps).

The central bank has raised borrowing costs to combat growing inflationary pressures caused by rising fuel and food prices.

In April, the consumer price index rose 4.9% year on year, already beating the central bank’s target range of 2-4% and the revised forecast of 4.6% this year.

BSP also signaled another 25 basis point hike in benchmark interest rates in its next policy review on June 23.

Currently, the overnight repo rate is 2.25%, while the overnight deposit and lending rates are 1.75% and 2.75%, respectively.

“BPI is expected to gain as interest income is the main driver of growth following the release of first-quarter results last month,” Diversified Securities, Inc. stock trader Aniceto K. Pangan said Friday in a post on Friday. cellphone.

Mercantile Securities Corp. analyst Jeff Radley C. See said in a Viber message that while market sentiment is not so good, “movements in the financial sector, especially across the top 3 banks, look bullish. due to the increase in rates by the BSP.”

“Investors are still in a wait-and-see scenario waiting for the new [Philippine] president at the end of June,” he added.

In the first quarter, BPI’s attributable net profit rose 59.6 percent year-on-year to 7.984 billion pesos.

Its net interest income increased by 12.7% per year to reach 18.99 billion pesos during the January-March period. Impairments also fell 30.6% to 2.5 billion pesos from 3.6 billion pesos a year ago.

“We expect BPI to continue to the side after rising this week with short term support at 92.00P per share and resistance at 98.80P per share as the overall market outlook remains negative,” Mr. Pangan said.

Mr. See placed support levels for BPI this week at P93.00 and P89.00, while resistance levels at P99.70 and P104.00. — LO Pillar