Bank of the Philippine Islands First Take: PPoP grows well, but credit costs move up; stay Neutral

Research evidence excerpt

Bank of the Philippine Islands First Take: PPoP grows well, but credit costs move up; stay Neutral

Daniel Andrew Tan, CFA AC Asia Pacific Equity Research

(63-2) 8554-2413 16 July 2026 J P M O R G A N

danielandrew.o.tan@jpmorgan.com

Investment Thesis, Valuation and Risks

Bank of the Philippine Islands (Neutral; Price Target: Php105.00)

Investment Thesis

We are Neutral on BPI.

• BPI’s digital push could place the bank on an accelerated medium-term growth path.

Launches across digital and physical channels (via agency banking) allow the bank to

reach new customers and potentially deliver higher growth over the next three years.

Customer count reached 18.2mn in 2025 from 9.3mn in 2022.

• Over the last 3Y, BPI has aggressively shifted its loan book to consumer/SME, reaching

30% of loans by FY25 from 21% in 2022. At the same time, the bank has drawn down

excess provisions built during the pandemic, with NPL cover at 95% as of FY25 from

180% as of FY22. While the mix shift has led to better NIM (4.59% in 2025 from 3.59%

in 2022, partly helped by the rate cycle), we see risks of higher NPL formation and credit

costs in the current environment.

• We factor in 110bps credit costs for FY26E, leading to 6% EPS decline vs. FY25.

Despite the cuts, we expect 12.6% ROE in 2026. With the stock trading close to book

value, we believe risk-reward appears fair.

• Following three years of significant increases in costs until FY24, we believe BPI is now

in a position to focus on efficiency, leading to lower cost growth over the next two years.

This includes re-negotiation of technology contracts, as well as potential optimization

post RBank integration.

• The bank has utilized software-as-a-service (SaaS) from third-party technology