BDO Unibank (bdo.ps): Down to Neutral; remain cautious on 2H outlook

Research evidence excerpt

BDO Unibank (bdo.ps): Down to Neutral; remain cautious on 2H outlook

Goldman Sachs BDO Unibank (BDO.PS)

Key investment thesis

n (-) Asset quality remains a key area to watch despite currently stable trends.

Management maintained its FY26 credit cost guidance of 55–60bps, below the 1H26

run rate of 67bps, noting that some of the precautionary provisions taken in 1H26

could potentially be released should conditions remain stable and certain vulnerable

exposures continue to perform better than expected. That said, we remain watchful

given the uncertain macro backdrop, with oil prices still elevated and domestic

growth conditions remaining subdued. While asset quality metrics have so far

remained resilient, with consumer delinquencies broadly stable and limited stress

observed across real estate and corporate portfolios, we believe risks remain skewed

towards the retail unsecured segment, where loan growth has been relatively

stronger in recent years. Elevated inflation, higher interest rates, and volatile energy

prices could continue to pressure consumer affordability and business cash flows. As

such, while we acknowledge management’s view that current precautionary

provisions may ultimately prove conservative, we believe the operating environment

could still warrant elevated provisioning levels. Additionally, with more rate hikes

expected by our economists, this could place additional pressure on debt servicing

capacity, particularly within the retail and SME portfolios. We therefore forecast

credit costs of 65bps in FY26 and 60bps in FY27, above management’s guidance

range.

n (+/-) Loan growth remains robust, although we are becoming more cautious on

the outlook beyond 1H26 amid a challenging macro backdrop. Loan momentum