Last Updated 20 Apr 2022

Financial Analysis of BDO Unibank

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The country’s largest lender Banco de Oro Unibank (BDO) is in line to meet its P20.4- billion net profit guidance for this year according to an article written by Dumlao (2013). This section analyses the financial performance of Banco de Oro to determine how efficient the bank utilizes its assets and how the bank has performed over the last five years. The researchers have employed ratio analysis methods and have used data from the year 2008 to 2012, all based on fiscal year-end to make the analysis more accurate.

Valuation Measures

The market capitalization of BDO has increased fivefold in 2012 amounting to P260.867 billion from P55.248 billion five years ago. Net sales are likewise positive for five consecutive years, from P56 billion to P78 billion. BDO has aggressively expanded operations in almost all provinces in the country, this has been made possible by follow on offering and expanding leverage in their portfolio. The total debt has now reached to P100.359 billion from P79.056 billion in 2008.

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Net Assets of P1,239.293 billion has increased by 35% or P443.040 billion, making BDO one of the largest commercial bank in the country. EBITDA has posted a twofold increase from P10.01 billion to P22.714, this shows the company’s sound financial performance and strong profitability over the last five years. Capital Expenditures on the other hand has been reduced from P5.078 billion to P2.975 billion last year. THE historical P/E ratio of BDO from 26.4 to 16.3 suggests that investors do not expect higher earnings growth in the future for the company.

The trend has changed after the financial crisis took place in 2008, shareholders are now only willing to pay P16.3 for every single peso earned by the company. In terms of Price-to-Cash flow, the market’s expectations of BDO’s future financial health have become conservative from as high as 12.7 in 2008 down to 10.6 last year. Price to Book value has increased from 1.0 to 1.7 which indicates that the company has earned a good return on its assets.

Profitability Ratios BDO’s net interest margin has been consistently at a 3-4% level, proving how successful they are in terms of investment decision since the amount of returns generated by BDO’s investments is greater than the interest expense. In terms of operating efficiency, the operating margin is 20.87% compared to only 6.57% in 2008, this shows that BDO now makes 20.87% earnings for every peso sale. According to Investopedia, a healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on the debt.

Financial Analysis of BDO Unibank essay

Related Questions

on Financial Analysis of BDO Unibank

How does BDO Unibank's valuation compare to its peers and peers?

According to these financial ratios BDO Unibank Inc.'s valuation is way below the market valuation of its peer group. The EV/EBITDA NTM ratio of BDO Unibank Inc. is significantly lower than the average of its sector (Banks): 13.34.

What is the history of BDO Unibank?

BDO Unibank, Inc. was incorporated in 1967 and is headquartered in Makati City, the Philippines. BDO UNIBANK operates under BanksRegional classification in the United States and is traded on OTC Exchange. It employs 38756 people.

Who are the competitors of BDO Unibank?

BDO UNIBANK competes with China Merchants, Hdfc Bank, BRASIL ON, PNC Bank, and US Bancorp. BDO Unibank, Inc. provides various banking products and services primarily in the Philippines. BDO Unibank, Inc. was incorporated in 1967 and is headquartered in Makati City, the Philippines.

How did BDO’s net assets and EBITDA increase?

Net Assets of P1,239.293 billion has increased by 35% or P443.040 billion, making BDO one of the largest commercial bank in the country. EBITDA has posted a twofold increase from P10.01 billion to P22.714, this shows the company’s sound financial performance and strong profitability over the last five years.

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