What are BDO's targets for its most recent acquisition?

The goal is to expand One Network Bank’s branches by 15 this year.

Although ONB is small, its NIM on teacher salary loan is higher at ~5% vs 3% for corporate loans, and has a fee-income processing component, according to Maybank Kim Eng..

"Its NPL is relatively low as loan payments are through an auto-debit salary deduction arrangement. ONB’s system is expected to be fully integrated this year, which will allow it to benefit from BDO’s low-cost deposits."

Here's more from Maybank Kim Eng:

On the revenue side, BDO is taking steps to raise earnings by balancing its loan portfolio to boost NIMs, enhancing transaction banking and the insurance business to support fees and building up the investment portfolio, particularly held-to-maturity assets, to minimize mark-to-market exposure. The latter will be slow as there will likely be a wait for higher yielding assets.

On the cost side, the digital banking infrastructure will be enhanced.

We believe our 2016F earnings of PHP25.55b (+2.5% YoY) is lower than consensus of PHP27.53b (+11.6%) mainly due to our assumption of a 27% decline in trading and FX gains.

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