You’ve Heard of BDO. But Do You Really Know If It’s Worth Buying?

Let’s be honest for a second.

Most Filipinos know BDO. You’ve probably used their ATM, paid bills through their app, or seen their branch on almost every major street corner in the country. It’s everywhere.

But here’s the question that matters to you as an investor: just because a company is popular, does that make it a good stock to buy?

Not always. And that’s exactly why we need to look at the numbers.

Because right now — with BDO trading at ₱119 per share as of April 2026 — some investors are excited. Others are scared. And most beginners simply don’t know where to start.

If that sounds like you, keep reading. Because in this article, we’re going to break everything down in simple terms — what BDO actually earns, how we came up with our own independent fair value, what the risks are, and whether this is actually a good time to consider buying.

What Is BDO Unibank? (The Simple Version)

BDO Unibank, Inc. is the largest bank in the Philippines — and it’s not even close. By total assets, loans given out, deposits collected, and capital held, BDO sits at the top of the Philippine banking industry.

Think of a bank as a business that does one core thing: it borrows money from depositors (you and me) at a low interest rate, then lends that money out to businesses and consumers at a higher rate. The difference between what it earns on loans and what it pays on deposits is called the “net interest margin” — and that’s basically the bank’s main engine for making money.

BDO has over 1,700 branches and thousands of ATMs across the country. It’s part of the SM Group — one of the biggest business conglomerates in the Philippines — which gives it a massive built-in customer base and strong financial backing.

In other words: BDO is not some small, risky company. It’s the country’s banking giant. But size alone doesn’t guarantee great returns for investors. Let’s dig into what the numbers actually say.

What Happened to BDO’s Business in 2025?

The Good News: Loans Are Growing

The most important thing driving BDO’s income right now is its loan book — the total amount of money it has lent out to customers. In 2025, BDO’s total loans grew to around ₱3.7 trillion. That’s a 13% increase from the year before.

And it’s not just one type of borrower. Consumer loans — things like personal loans and credit cards — grew even faster at nearly 18% year-over-year. Business loans from small and medium companies also picked up strongly, and even the biggest corporate borrowers increased their borrowing.

More loans = more interest income for BDO. Simple as that.

For the full year 2025, BDO brought in ₱203 billion in net interest income — the money it earned from lending minus what it paid depositors. That’s almost 9% higher than the year before.

The Net Income Story

BDO booked a total net income of ₱87.2 billion for 2025. That’s about 6.3% higher than 2024. Not explosive growth, but steady and consistent — which is exactly what you want to see from a bank.

Here’s a number that really matters: Return on Equity (ROE). Think of ROE as how efficiently the bank uses its shareholders’ money to generate profit. BDO’s ROE for 2025 came in at around 14.4%. That’s a solid number — not exceptional, but well above average for Philippine banks.

The Catch: Rising Costs

Here’s where things get a bit tricky.

BDO’s operating expenses grew faster than its revenues in 2025. The bank is investing heavily in technology, branch expansion, and building for the future — which management calls “build-the-bank” spending. These IT and expansion costs jumped by nearly 38% in the final quarter of 2025 alone.

The result? BDO’s cost-to-income ratio — the percentage of its revenue that goes toward expenses — rose to 57.4% in 2025. That means for every ₱100 it earns, over ₱57 goes toward running the bank. Management has guided that this elevated cost level will continue for the next few years before gradually improving.

Is this alarming? Not necessarily. Many of the best banks in the world go through periods of heavy investment before reaping the rewards. But it does put some pressure on near-term profits.

Asset Quality: One Bright Spot

One of the biggest risks in banking is the possibility that borrowers can’t pay back their loans. These are called non-performing loans (NPLs), and they’re a key indicator of a bank’s health.

Good news here: BDO’s NPL ratio improved to 1.68% by the end of 2025 — down from 1.83% a year earlier. And the bank maintains a coverage ratio of 133%, meaning it has set aside more than enough money to absorb any losses from those bad loans.

In simple terms: BDO is lending money wisely, and the vast majority of its borrowers are paying on time.

Our Independent Valuation: Is BDO Cheap at ₱119?

This is the part that really matters for investors. We’re not going to use complicated financial models that require a finance degree. Instead, we’ll use a simple, earnings-based approach that you can understand and follow.

Here’s our approach, step by step:

Step 1: Start With What BDO Actually Earns

For FY2026, BDO is projected to earn about ₱18.61 per share (EPS). This is based on continued loan growth and improving profitability. This is our baseline — how much money the bank generates for each share you own.

Step 2: Pick a Fair Valuation Multiple (P/E Ratio)

A P/E ratio tells you how many times the company’s earnings investors are willing to pay for. For Philippine banks, a fair starting point is 6x to 8x earnings.

Here’s how we adjusted that base:

• Base P/E for financials: 7x (mid-range)
• ROE of ~14.5% (solid but not exceptional): +1x adjustment
• Earnings growth of ~12.6% for FY2026: +1x adjustment
• NIM pressure + elevated cost-to-income ratio: −1x deduction

Final adjusted P/E: 8x

Step 3: Calculate Fair Value

Fair Value = FY2026E EPS × Adjusted P/E = ₱18.61 × 8 = ₱148.88

So our independent estimate of BDO’s fair value is roughly ₱148 to ₱149 per share.

Step 4: Apply a Margin of Safety

We never want to buy exactly at fair value — that leaves no room for error. For a large-cap bank like BDO, we use a 20% margin of safety.

₱148.88 × (1 − 0.20) = ₱119.10

That’s our Buy Below Price: approximately ₱119.10.

Metric	Value	Notes
FY2025 EPS (Actual)	₱16.34	Derived from reported net income & share count
Forward EPS (FY2026E)	₱18.61	Projected earnings per share
Base P/E (Financial Sector)	7x	Mid-range for Philippine banks
ROE Adjustment	+1x	ROE ~14.5%: in range, not premium
Growth Adjustment	+1x	Earnings growth ~12.6% FY26E
NIM Pressure / Cost Risk	−1x	Downward NIM pressure + elevated CIR
Adjusted P/E	8x	Final applied multiple
Fair Value Estimate	₱148.88	FY2026E EPS × 8x
Margin of Safety (20%)	20%	Standard for large-cap banks
Buy Below Price	₱119.10	At or below current price of ₱119.00
Current Price (Apr 5, 2026)	₱119.00	Your entry point reference
Potential Upside to Fair Value	~25%	From current price to fair value

⚠️  Risks You Need to Know Before Buying BDO

No investment is without risk. Here are the key things to watch:

1. Rising Costs Could Squeeze Profits

BDO is spending heavily on technology and expansion. If revenues don’t grow fast enough to absorb these costs, profit growth could disappoint. Management has already warned that the cost-to-income ratio will stay elevated for at least the next few years.

2. Net Interest Margin Pressure

As interest rates in the Philippines gradually ease, BDO may earn slightly less on each peso it lends. Management has flagged increasing downward pressure on their net interest margin. This could slow income growth even as loan volumes rise.

3. Loan Growth May Moderate

BDO expects loan growth to slow to the low double digits in 2026 — still healthy, but not as fast as 2025. If economic growth in the Philippines slows or if consumers pull back on borrowing, this could come in even lower.

4. Fee Income Weakness

Non-interest income — particularly fees from transactions and services — was a weak spot in 2025. Fee revenues dropped sharply in the fourth quarter, and this area remains something to monitor going forward.

5. Macro and Rate Environment

BDO’s performance is closely tied to the Philippine economy. A slowdown in growth, rising unemployment, or a global financial shock could affect loan quality and borrowing demand.

Final Thoughts: Should You Buy BDO at ₱119?

Here’s the bottom line:

BDO is the largest, most well-established bank in the Philippines. It’s growing its loans, maintaining healthy asset quality, and generating consistent profits. Its ROE of around 14-15% is solid, and its earnings are projected to grow at double digits over the next two years.

At ₱119 per share, the stock is trading right at our calculated buy-below price — meaning you’re getting the country’s biggest bank at a price that includes a reasonable margin of safety built in.

Is it a perfect investment? No. Rising costs, margin pressure, and slower fee income are real concerns. But for a long-term investor who’s thinking 5 to 10 years ahead, BDO at these levels looks like a reasonable opportunity.

The key word is patience. BDO isn’t a stock that will double overnight. But it’s the kind of foundational, quality company that steadily grows your wealth over time — exactly the kind of stock that long-term investors in the Philippines should consider.