PH_BDO: Q3 2026 profit up just 1.5%, with growth resting on interest income

On 25 November PH_BDO released its results for the third quarter of 2026: operating profit came to PHP 33,992 mn and net profit to PHP 22,894 mn, just 1.5% above the level of a year earlier. Over the trailing twelve months the bank earned PHP 87,904 mn of net profit on net interest income of PHP 265,400 mn. At a P/E LTM of 7.2 and an ROE of 13.9%, the share looks moderately attractive: the valuation sits below what the return on equity would imply, but profit growth has nearly stalled and a dividend yield of 3.8% leaves little margin of safety.

Key takeaways

— Net profit in Q3 2026 rose just 1.5% year on year, to PHP 22,894 mn

— Operating profit of PHP 33,992 mn grew faster than net profit – the gap was eaten below the operating line

— Over the trailing twelve months the bank earned PHP 87,904 mn on net interest income of PHP 265,400 mn

— A P/E LTM of 7.2 against an ROE of 13.9% leaves the share room to its fair value

— A dividend yield of 3.8% is thinner than the current rate environment demands

— On the portal's model the share is 15% below fair value

Attractiveness

Key figures, PHP bn

Net profit in Q3 2026 rose just 1.5% year on year, to PHP 22,894 mn

The headline figure is PHP 22,894 mn of net profit for the third quarter of 2026. That is 1.5% more than a year earlier, so growth has essentially stalled: the bank is expanding its business, but little of it reaches the bottom line.

For a holder the quarter itself matters less than the fact that profit has stopped growing faster than operating profit. When the top of the report grows and the bottom stands still, the pressure comes from costs or provisions, not from revenue.

Over the trailing twelve months net profit came to PHP 87,904 mn. That base determines what the bank can pay shareholders and what its capital is worth.

Operating profit of PHP 33,992 mn grew faster than net profit – the gap was eaten below the operating line

Operating profit for the third quarter of 2026 was PHP 33,992 mn. It grew faster than net profit, and that is the key observation of the report: the core business is working, but less of it reaches the bottom line.

The gap between operating and net profit – PHP 11,098 mn – is what the bank gives up to taxes, provisions and other items below the operating line. That is where the slowdown sits, not in revenue.

Until the gap narrows, profit will grow more slowly than operating profit. The next report will show whether this is a one-off or the new normal for the bank.

Over the trailing twelve months the bank earned PHP 87,904 mn on net interest income of PHP 265,400 mn

Over the trailing twelve months net interest income was PHP 265,400 mn and net profit PHP 87,904 mn. The interest business remains the foundation, and its scale is three times profit.

The ratio of profit to interest income is about one third. That means even a modest squeeze in the interest margin or a rise in provisions can cut profit noticeably.

For a bank this is a normal structure, but it makes the result sensitive to the cost of funding. As long as interest income holds at this level, profit holds, but there is little room for error.

A P/E LTM of 7.2 against an ROE of 13.9% leaves the share room to its fair value

The share trades at a P/E LTM of 7.2 with a return on equity of 13.9%. That combination means the market values the bank below what the return on its capital would allow.

On the portal's model the share is 15% below fair value. This is our own estimate, not a market consensus, and it rests on the relationship between profit and capital.

There is room, but it is modest: with profit barely growing, the multiple is unlikely to re-rate quickly. The main driver is the stability of interest income and the ability to hold the return on equity.

A dividend yield of 3.8% is thinner than the current rate environment demands

The dividend yield over the trailing twelve months is 3.8%. For a bank with a return on equity of 13.9% that is a moderate level, but it offers little advantage over the risk-free rate.

Payouts rest on profit of PHP 87,904 mn over the trailing twelve months. If profit stops growing, the dividend will also hit a ceiling, and the yield will stay where it is.

A rise in provisions or a fall in interest income could cut the payout. As long as profit is stable, a 3.8% dividend is more a support for the price than a source of return.

On the portal's model the share is 15% below fair value

Our model puts fair value 15% above the current price. The calculation rests on the bank's profit and capital, not on market consensus.

The estimate stands on two supports: a return on equity of 13.9% and stable interest income. If Q3 2026 profit comes in weaker than expected, the 15% cushion could shrink.

For a holder this means the current price leaves room to grow, but realising that room depends on whether profit holds at the trailing-twelve-month level.

Valuation on the latest reported figures

Bottom line

The strong point of the report remains operating profit of PHP 33,992 mn, which is growing faster than net profit. But only PHP 22,894 mn reaches shareholders, and growth of that sum has nearly stalled at 1.5%. A valuation of 7.2 times earnings against a 13.9% return on equity, plus a 15% cushion on the portal's model, argue in favour of the share, but a 3.8% dividend yield offers little advantage. The question for a holder now is whether profit holds at the trailing-twelve-month level and whether the gap between operating and net profit narrows.