Bank of the Philippine Islands

Disclaimer: The research and recommendation below were generated by Claude Fable. Please treat this as one input for your own research — not as the sole basis for any decision to buy or sell a stock.

Last checked: July 19, 2026
Price: 104.0000
Trading status: Normal
Recommendation: Hold (best-run big bank, fairly priced; credit-cost trend stabilizing but not confirmed)Hold
Committee call: Hold
Indices: PSEi, MSCI

Analysis

BPI - Bank of the Philippine Islands

One-line summary: the Ayala-controlled, highest-ROE big universal bank in the Philippines, fairly priced rather than cheap at 8.2x trailing earnings and 1.14x book, with a consumer/SME lending push that drove NPL coverage down hard in Q1 2026 but has now rebuilt for a quarter, even as headline profit growth stays flat.

Snapshot


Reviewed	July 19, 2026
Index membership	PSEi, MSCI
Price at review	P104.00 (close, PH time)
Recommendation	Hold (quality franchise, fairly valued, credit-cost trend has stabilized for one quarter but not confirmed)
Market cap	P550.8B (5.30B shares)
Trailing P/E	~8.22x (price / TTM EPS of P12.66, +5.1% YoY)
Forward P/E	~7.54x (analyst consensus estimate)
Dividend	TTM P4.56/share, ~4.38% trailing yield; latest declared tranche still P2.58/share, ex-date June 3, 2026 (no new declaration since)
P/B	~1.14x (unchanged from Q1 2026)
Capital (in place of D/E)	CET1 14.0%, CAR 14.8% (Q2 2026), both above BSP minimums of 10% CAR / 6% CET1

Net interest income, fees, and earnings trend

BPI's core engine is net interest income (NII), which has grown every year through the period: P148B in 2025 (+16% YoY, per BPI's own FY2025 disclosure), building on a run from P84.3B (2021) to P109.4B (2022), P134.3B (2023), P163.5B (2024) on stockanalysis.com's structured revenue series (which nets interest expense differently from BPI's own headline "total revenue" figure, so the two series are not directly comparable line for line, but both show the same trajectory and the net income figures reconcile). Net income more than doubled from P23.9B (2021) to P66.6B (2025), a record year, with non-interest income (fees from cards, insurance, wealth management, plus trading gains) contributing P47.2B in 2025, up 11%. Latest quarter: Q1 2026 net income was P16.92B, up only 1.7% year on year (up 4.9% sequentially), even as total revenue grew 13.9% and loans grew 13.5%, a sign that provisioning and funding costs are eating into the top-line growth.

EPS growth has decelerated in the same pattern seen across PH banks: P4.86 (2021) to P8.05 (2022, +65.6%), P10.90 (2023, +35.4%), P11.78 (2024, +8.1%), P12.62 (2025, +7.1%), and TTM through Q2 2026 of P12.66, essentially flat versus FY2025. BPI's deceleration has been less severe than some peers (it is still growing profit, not flatlining), but the trend is the same direction: the easy post-pandemic re-rating of margins and volumes is behind the sector, and 2025-2026 growth is coming from credit provisioning discipline and fee income rather than a repeat of 2022-2023's rate-driven surge.

H1 2026 results, released July 16, 2026, confirm the flattening: net income of P32.8B was down 0.4% year on year from P33.0B in H1 2025, even as total revenue grew 12.4% to P104B on a 12.5% rise in net interest income and an 18% jump in fee income (cards, investment banking, insurance, wealth management) that lifted non-interest income 12.1% to P24.0B. The gap between strong top-line growth and flat net income is opex and provisions: operating expenses rose 13.8% to P48.6B (manpower and technology spend), pushing the cost-to-income ratio to 46.8%, while provisions jumped 84% year on year to P13.3B on expected credit losses tied to a weaker economic outlook. Net interest margin actually improved to 4.63% (up 5bps sequentially), so the earnings drag is coming from expenses and credit costs, not from the lending spread.

Asset quality, margins, and capital adequacy

Free cash flow is not a meaningful concept for a bank (deposit-taking and lending are the operating business, not an investing activity to net against operations), so this section substitutes the metrics that actually describe the bank's health.

Asset quality: NPL ratio was 2.18% at end-2025, rose to 2.42% in Q1 2026, and held flat at 2.42% in Q2 2026, quarter over quarter, the first quarter without further deterioration since the consumer-lending push began showing strain. More notably, NPL coverage, which had fallen from 94.9% (end-2025) to 87.15% (Q1 2026), rebuilt to 92.98% in Q2 2026, a real reversal of the buffer erosion flagged in the July 12 review. This is one quarter of improvement, not the two consecutive quarters the page's own buy trigger calls for, and NPL is still above the end-2025 level, but the direction has turned. Provisions for H1 2026 were P13.3B, up 84% year on year, still elevated but a materially less alarming growth rate than FY2025's 168.9% spike.
Net interest margin: 4.59% for FY2025, 4.57% in Q1 2026, and 4.63% in H1 2026 (up 5bps sequentially), among the widest margins of the big PH banks, helped by the shift toward higher-yielding consumer and SME loans and the still-elevated PH rate environment. Margin is not the problem in this earnings cycle; expenses and provisions are.
Loan growth: total loans grew 14.7% in FY2025 to P2.6 trillion, 13.5% YoY in Q1 2026, and 12.4% YoY in H1 2026 to P2.7 trillion, with the consumer/SME push still running hot: SME portfolios surged 74.5% and credit card receivables grew 28.9% year on year. Management's 2026 loan-growth guidance (10-12%, cut from an earlier ~13%) is tracking roughly in line with the H1 print rather than showing further slippage.
Capital adequacy: CET1 was 13.9% at end-2025 and Q1 2026, improving to 14.0% in Q2 2026; CAR held steady at 14.8% across both quarters. Capital ratios have been the most stable line in this whole story, comfortably above BSP's 10% CAR / 6% CET1 minimums throughout the credit-cost scare.
Deposits: total deposits grew 9.2% year on year to P2.8 trillion in H1 2026 (P2.84 trillion in Q1 2026), with CASA (low-cost current/savings funding) at 60.3% of the total as of Q1 2026, a healthy funding mix.

Dividend sustainability

BPI paid a total of P4.36/share for FY2025 (declared and paid across two semi-annual tranches), up 10.1% from P3.96 in FY2024. The most recent declaration remains P2.58/share with an ex-dividend date of June 3, 2026 and pay date of June 18, 2026, a 24% jump from the year-ago H1 2025 tranche of P2.08; no new declaration has followed the H1 2026 earnings release, which is normal for BPI's semi-annual cadence (the next tranche would typically be declared alongside or after FY2026 results). Trailing twelve-month dividend per share is now P4.56 per stockanalysis.com, yield ~4.38% at the current price. Against EPS of P12.62 (FY2025), the payout ratio works out to roughly 34.6%, essentially unchanged from FY2024's 33.7%. This is a well-covered, growing dividend, not a maximum-payout one: BPI is retaining roughly two-thirds of earnings to fund its double-digit loan growth (institutional, SME, and consumer) and to support capital ratios during an active credit-cycle stretch.

ROE

ROE climbed from 8.36% (2021) to 12.96% (2022), 15.29% (2023), peaked at 15.72% (2024), then eased to about 14.5-14.7% (2025), 14.3% in Q1 2026, and 13.8% for H1 2026 (ROA 1.8%), per BPI's own H1 disclosure. This is a genuinely strong return profile, still the highest among the large PH universal banks reviewed so far, and it is backed by capital ratios comfortably above regulatory minimums rather than thin-equity leverage. The easing from the 2024 peak continues, but the pace of the decline has slowed rather than accelerated this quarter, consistent with the NPL coverage rebuild rather than a fresh leg down.

Capital allocation

Capital is being deployed in three directions: (1) funding double-digit loan growth across both the institutional book and an aggressive consumer/SME lending push (credit cards +28.9% YoY, SME +74.5% YoY in H1 2026), which is the largest single use of capital and is the source of the elevated provisions; (2) a growing, well-covered semi-annual dividend (payout ratio in the mid-30% range, leaving room to keep raising the per-share amount as earnings grow); and (3) the completed Robinsons Bank merger, effective January 1, 2024, with BPI as the surviving entity. The merger was funded with roughly 314 million new BPI shares (about 6% of the company) issued to Gokongwei-led JG Summit Holdings and Robinsons Retail Holdings; Robinsons Retail separately bought an additional 4.4% BPI stake from a GIC affiliate, bringing the combined Gokongwei group stake in BPI to about 10.4%, the second-largest shareholder block behind Ayala. System and branch integration between BPI and Robinsons Bank is now complete: the final system cutover happened in June 2026, and RBank's digital channels were folded into BPI's platforms effective July 1, 2026. There have been no share buybacks in the recent record; ownership is controlled but not family-thin: Ayala Corporation and affiliates hold about 45.4% (as of Q1 2025), the Gokongwei group about 10.4%, and the Roman Catholic Archbishop of Manila holds a notable legacy stake of about 7.3% (a historical curiosity rather than an active influence on strategy), with the balance in public float. This is a controlled company, but control is split across more than one large shareholder rather than concentrated in a single family the way some peers are.

Verdict at P104.00 (July 19, 2026)

Hold. The Q2 2026 earnings release on July 16 was the real test flagged in the last review, and it came in mixed but net encouraging on the specific worry that mattered: NPL ratio held flat at 2.42% instead of climbing further, and NPL coverage rebuilt from 87.15% (Q1 2026) to 92.98% (Q2 2026), a genuine reversal of the buffer erosion that drove the last review's caution. Net interest margin also improved to 4.63%. That is one quarter of stabilization, not the two consecutive quarters the page's own buy trigger asks for, but it is the first quarter since the consumer/SME push accelerated that the credit-quality trend did not get worse.

Set against that, headline profit growth is still flat: H1 2026 net income of P32.8B was down 0.4% year on year, with strong 12.4% revenue growth eaten up by a 13.8% jump in opex and an 84% jump in provisions (still elevated, though a much less alarming growth rate than FY2025's 169% spike). ROE eased further to 13.8% for H1 2026 from 14.3% in Q1. Valuation has not moved either: trailing P/E of about 8.2x and P/B of about 1.14x are essentially unchanged from the last review, and still consistent with the market pricing BPI's ~14% ROE about fairly against a PH bank cost of equity in the low-teens, not handing out a bargain. That leaves the same conclusion as July 12: a quality franchise, fairly priced, with a credit-cost trend that has stopped getting worse but hasn't yet earned an upgrade.

What would change the call:

Buy trigger: price falls into the high P80s to low P90s (near the 52-week low of P87.00, implying trailing P/E under roughly 7x and P/B near 1.0x) while NPL stays below 2.5% and coverage keeps rebuilding; or NPL coverage holds above 95% and NPL ratio drops back toward 2.0% for a second consecutive quarter, while net income growth reaccelerates into double digits, confirming the consumer/SME lending investment phase has turned the corner (the July 2026 print is the first data point toward this, not the confirmation).
Sell trigger: NPL ratio breaks above roughly 3% (approaching the industry average) with coverage reversing back below 85%, CET1 drops below roughly 12%, the dividend is cut or held flat for more than one cycle despite rising earnings, or net income growth turns negative for two or more consecutive quarters, confirming the credit costs from the consumer-lending expansion are structural rather than a temporary seasoning effect.

Analysis, not financial advice.

Committee review (July 19, 2026)

Five investor lenses judged this page's facts independently, each strictly inside its own framework.

Lens	Signal	Confidence	Core argument
Ben Graham	Bullish	66	Graham number (P/E x P/B = 9.36) still sits far below the 22.5 ceiling, and CET1 improved to 14.0%/CAR 14.8% show conservative financing. Confidence up slightly because coverage rebuilding from 87.15% to 92.98% restores some of the senior-claims buffer, but the ROE decade still lacks the decade of stability Graham requires, and H1 2026 net income growth is still negative (-0.4%).
Warren Buffett	Bullish	70	NIM improved again to 4.63%, and mid-teens ROE (13.8% H1 2026) on conservative leverage (CET1 14.0%) is still the kind of economics Buffett wants, at an undemanding 8.22x P/E. The coverage rebuild to 92.98% is a good sign management is reserving properly rather than letting the problem compound, which slightly raises confidence versus last review.
Michael Burry	Bearish	42	H1 2026 net income is still down 0.4% YoY and provisions are still up 84%, so the "record profit" story from FY2025 has not returned; the coverage improvement to 92.98% is one data point, and opex growing 13.8% (faster than revenue in the underlying spread business) is a second cost pressure layering on top of credit costs. Confidence eased slightly since the immediate coverage crisis has passed, but the earnings trend has not turned.
Nassim Taleb	Bearish	52	The coverage rebuild (87.15% to 92.98%) reduces near-term tail risk, but the underlying exposure keeps growing faster than the balance sheet's history with it: SME loans +74.5% YoY and credit cards +28.9% YoY are both unsecured or thinly-collateralized growth in exactly the segments that produced this year's NPL scare. One good quarter of reserving does not retire that exposure.
Stanley Druckenmiller	Neutral (leaning cautious)	40	The July 16 print was the catalyst flagged last review, and it delivered a mixed signal: credit metrics stabilized, but profit growth did not reaccelerate and price is unchanged at P104. No fresh catalyst until FY2026 results or a clear second quarter of coverage improvement; the consensus P132 target is already public and unmoved by this print.

Conferred call: Hold (2 bullish, 2 bearish, 1 neutral, still a genuine split). This matches the page's own Hold recommendation exactly. Confidence shifted modestly toward the bull side across the board (Graham and Buffett both up, Burry and Taleb both down slightly) as the coverage rebuild registered, but nobody flipped signal, because the earnings-growth half of the bear case (flat H1 net income, rising opex) is still live. No conflict with Brain/concepts/stock-trading-strategy-and-rules.md: there still isn't a clear catalyst or setup-quality edge, which continues to argue for waiting rather than acting.

Shared flip trigger: Graham, Buffett, Burry, and Taleb all converge on the same line: NPL coverage holding above 95% for a second consecutive quarter alongside net income growth turning positive again would flip the bear case bullish; a reversal of the Q2 coverage gain alongside NPL breaking 3% would do the opposite.

Review history

Date	Price	Recommendation
July 19, 2026	104.00	Hold (quality franchise, fairly valued, credit-cost trend has stabilized for one quarter but not confirmed)
July 12, 2026	103.00	Hold (quality franchise, fairly valued, wait for credit costs to stabilize or a cheaper entry)
July 10, 2026	104.00	Hold (quality franchise, fairly valued, wait for credit costs to stabilize or a cheaper entry)