Philippine National Bank: Undervalued Bank


Bank continues to be undervalued in years

Philippine National Bank (PNB) has been affected by the recent down turn in the broader Philippine stock market having fallen 4.23% year-to-date.

The Philippines’ sixth largest bank by assets recently reported 13% rise in revenue, or net interest income in financing terms, accompanied by a 14% rise in profits in 2017.

In 2017, PNB grew its book value by 9.1% to 117.1 billion giving it a price-book value multiple of 0.6x compared to its industry’s 3x.

Exact bank-specific figures for fiscal year 2017 were not available at the time of writing. Three quarters of operations that ended in September 2017 would be discussed instead.

PNB had a Tier 1 ratio of 15.45% compared to its nine-months earlier figure of 16.65%.

The bank also had non-performing loans ratio of 0.08% compared to 0.18% in December 2016.

PNB’s profitability, net interest margin, logged at 3.1% in this period compared to 3.2% a year earlier.

In the past three years, PNB raised 12.4 billion in financing activities and provided 1.25 billion in shareholder dividends.

PNB ended with 169.3 billion in cash as of December 2017.

Despite being undervalued, COL Financial has a hold rating on PNB with 66.50/share value compared to 56.30/share at the time of writing.

Personal estimates indicated a per share figure of 95/share.

Disclosure: No shares in PNB

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