The Bank of the Philippine Islands (BPI) remains bullish on the economy this year, as it prepares for stronger growth and low inflation, according to its President and CEO, TG Limcaoco.
“People are talking about higher inflation in the second quarter, primarily because of base effects. But our forecast, internally, is that you’ll see a little bump in the second quarter, but that will again come down in the third quarter, which should give room for the BSP to cut rates,” said Limcaoco.
The BPI head also believes that there is more consumer confidence these days, as they are “comforted by the fact that, for the most part, the rise in interest rates has stopped and people are looking forward to falling interest rates by the second half of the year, so that bodes well for the economy.”
BPI is also seeing strong growth on the consumption side.
“Our credit card book grew 38. Our auto loan book grew 24, and our total loan book grew 10 and a half percent for the year when we were expecting it to only grow 8 percent,” Limcaoco added.
As it sustains its growth momentum, the bank is also serious about moving its customer base to its mobile apps, as part of its ambitious goal of “significantly” growing its customer targets “by making a big push.”
“We have about 11 million customers and about over 6 million customers who have registered in the BPI mobile app, with about 4.5 million that use that actively. We plan to increase from 11 million to something quite significant, significantly higher than that by the end of this year,” he said.
One way to achieve this is through the bank’s business unit launched last year, Agency Banking.
“This strategy means we are not relying solely on our own branches and digital platforms, but you can also have access to pur products and services from different partner merchants. You can go to any Robinsons retail store, Ayala mall, etc. and get assistance to open an account or onboard any of our services with the people there. We have over 5,000 doors that we call partners today,” he continued.
While some investors worry about a short-term pullback following the sharp rally in many stock indices since October 2023, the stock brokerage arm of BPI is still optimistic that there will be strong support for the Philippine Stock Exchange Index (PSEi) to close the year at the 7,500 handle.
“There is a possibility for a slight correction or some sideways movement in the near term; it has been a remarkable rally since October,” said BPI Securities President Haj Narvaez.
“But I still believe the arrow is pointing up until year-end–earnings will grow around 10 this year and rate cuts are likely coming. Combined, this is a recipe for P/E multiple expansion.”
For Narvaez, the main challenge in the first half of 2024 is low liquidity.
“We’ve seen turnover fall to about P4 billion per day. Back in 2021, we were doing about P8 billion. The low turnover is in line with expectations and a function of high rates offered by less risky assets. We only see it (liquidity) improving meaningfully in the back end of the year or six to nine months after rate cuts occur.”
Given the spectre of improving liquidity and increased foreign investor interest, he advised investors to focus on large-cap stocks, such as property-focused conglomerates, a major sector in the index.
“The country will start to see more pronounced improvement in liquidity especially in the second half, or closer to the fourth quarter of this year. And when you have improvement of liquidity, that will probably be accompanied as well by more foreign interest. Typically, foreign funds tend to focus on the large-cap stocks,” Narvaez said.
To further support the bank’s various initiatives to enable more Filipinos, they have also tapped several ambassadors who can influence Filipinos how to #DoMore with their trusted financial partner.
The 172-year-old BPI is the first bank in the Philippines and Southeast Asia. It is licensed as a universal bank by the Bangko Sentral ng Pilipinas to provide a diverse range of financial services: deposit taking and cash management, payments, lending and leasing, asset management, bancassurance, investment banking, securities brokerage, and foreign exchange and capital markets.
BPI has significant financial strength, with robust Tier 1 capital adequacy ratios and profitability, underpinned by stringent compliance and risk management regimes.
