In a new report, stock brokerage house AP Securities Inc. said lenders such as the Ty family’s Metropolitan Bank & Trust Co. and Sy’s China Banking Corp. are better positioned than others in such a scenario.
What sets these lenders apart is their relatively lower loan-to-deposit ratio, which measures how much of their deposits are being used for loans.
“This means that these two banks can afford to take on even high-risk consumer loans to maximize their available resources and lock in yields before interest rates start going down in earnest,” said Alfred Benjamin R. Garcia, head of research at AP Securities.
He said these two banks also have the lowest non-performing loan ratios of 1.59 percent and 1.85 percent.
This indicates that these banks have been more conservative with their lending, but they also have room to grow faster relative to other lenders.
Buy rating
Garcia said efforts to free up liquidity through a reduction in the reserve requirement ratio, which measures reserves a bank must hold, will boost profits for both banks.
He said Metrobank has a “Buy” rating with a consensus target price of P83.20 per share while China Bank is a “dark horse” pick, with a target price of P42.90 per share.
“While we acknowledge that there is a risk that [Metrobank] and [China Bank] would fail to fully utilize the additional liquidity, we remain optimistic on these two banks’ growth potential,” Garcia said.
Financial market recommendations and comments on InsiderPH News belong solely to the analysts and institutions making them. They do not represent buy, sell or hold recommendations of InsiderPH News. Investments held by analysts or institutions may influence their recommendations. Investors should conduct their own research and carefully evaluate all relevant market information before making investment decisions. As always, the past performance of any investment does not guarantee its price appreciation in the future.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
