Philippine Banks Outrun a Shrinking Utility as Conglomerates Split

This quarter's Philippine corporate season was defined by a violent divergence: banks delivered a median revenue gain of +21.8% year over year, while the sole utility in our sample, MER, saw revenue collapse 77.0%. That 98.8-percentage-point gap between the best and worst industry medians is the widest in recent memory, and it set the tone for everything else — from a ports standout to a conglomerate that grew revenue at +36.8% yet trades at just 7.9 times earnings.

Revenue growth by industry (median YoY)

Banks and ports are the engines of this cycle

The banking sector's median revenue growth of +21.8% was powered by a stunning +140.5% surge at SECB, which also lifted EBITDA by +23.0% and net profit by +11.3%. UBP was the earnings champion: revenue +33.0%, EBITDA +60.6%, and net profit +69.3% — the strongest bottom-line growth among all banks. Even BPI and BDO, with revenue up +21.8% and +15.6% respectively, showed that the sector's momentum is broad-based, though their net profits slipped slightly (-2.0% and -1.5%).

Ports & Logistics, represented by ICT, posted a median revenue gain of +25.3% — the highest of any industry — and net profit rose +33.7%. That combination of top-line and bottom-line growth, with a P/E of 24.7x, suggests the market is already paying up for this story. Meanwhile, AEV in the conglomerate space grew revenue +36.8% and net profit +34.6%, showing that selective conglomerates can still deliver.

The utility sector is a value trap until proven otherwise

MER's revenue plunged 77.0% year over year, the worst top-line performance in our entire sample. EBITDA fell 6.8%, yet net profit soared +127.5% — a bizarre split that likely reflects one-off items or accounting effects rather than operational strength. Real estate also struggled: ALI saw revenue decline 5.1%, EBITDA drop 32.2%, and net profit fall 10.3%. Among conglomerates, DMC posted a 36.0% revenue decline, though its EBITDA and net profit surged +118.0% and +176.4% — a stark reminder that revenue is not always the best gauge of health.

The plot twist: DMC's profit explosion despite a revenue collapse

DMC's revenue fell 36.0% year over year, yet EBITDA rocketed +118.0% and net profit surged +176.4%. This is the most dramatic decoupling of top-line and bottom-line in the dataset. It could signal a successful pivot to higher-margin businesses, aggressive cost-cutting, or asset sales — but without prior-period comparisons, the sustainability is unclear. Similarly, AC saw EBITDA rise +75.9% while net profit plummeted 164.0%, another case where the headline numbers hide a more complex story. Investors should dig into the details before extrapolating.

Cheap for a reason: conglomerates and banks offer value, but quality varies

Among banks, SECB trades at just 3.9x earnings after growing revenue +140.5% — the cheapest P/E in the sector and a potential bargain if growth is sustainable. UBP, with +69.3% net profit growth, trades at 4.8x earnings, also attractive. In conglomerates, AGI at 3.2x earnings and JGS at 4.0x look cheap, but AGI's net profit fell 32.3% and JGS's net profit dropped 28.7%, so the low multiples reflect real concerns. On the expensive side, ICT at 24.7x earnings and 14.3x EV/EBITDA is priced for perfection, while JFC at 18.5x earnings and GLO at 10.3x earnings offer less compelling value relative to their growth. MER, despite a 7.4x P/E, is a value trap until its revenue stabilizes.

Income hunters: banks and telcos still pay, but yields are not in the data

The dataset does not include dividend yields or DPS figures, so we cannot rank income plays. However, the low P/E ratios of SECB (3.9x), UBP (4.8x), and MBT (9.1x) suggest that if these banks maintain their payout ratios, they could offer competitive yields. GLO at 10.3x earnings and TEL at 8.5x are traditional income names, but their net profit growth was weak (+0.4% and -16.4% respectively), which may pressure future dividends. Without explicit yield data, income investors should await the separate table for specifics.

Looking ahead, the divergence between banks and the utility sector is likely to persist as long as interest rates remain supportive for lenders and MER's operational issues are unresolved. The conglomerate space is a mixed bag: AEV and SM offer steady growth at reasonable valuations, while DMC and AC require deeper due diligence. Watch for SECB's ability to sustain its explosive revenue growth and whether UBP's profit surge continues. The market is rewarding growth with premium multiples, but the cheapest names — SECB, UBP, AGI — could offer the best risk-reward if their fundamentals hold. For now, the Philippine corporate story is one of haves and have-nots, and the gap is widening.

Players: growth & yield (no absolute levels)