BDO, BPI, Metrobank keep ratings

MANILA, Philippines - The country’s three largest banks in asset terms retained their respective credit ratings from Moody’s Investors Service on the back of strong capitalization, high liquidity and prospects of continued profitability.

BDO Unibank Inc., Metropolitan Bank & Trust Co. and the Bank of the Philippine Islands (BPI) kept their Ba1 long-term local and foreign currency deposit ratings, Moody’s said in a statement late Friday.

The short-term local and foreign currency deposit ratings of the three banks were kept at “not prime” which means they do not fall within the “prime” ratings that measure the capability to pay short-term obligations.

The outlook for the ratings is stable.

“We expect the steady trend of good profitability to continue and support the banks’ capital replenishment efforts as they pursue credit growth and prepare for higher capital requirements under Basel III,” the debt watcher said.

At the same time, the bank financial strength rating of BPI and Metrobank were revised upwards to D+ from D, which according to Moody’s metrics, means “modest intrinsic financial strength” requiring “some” support at times.

 Their financial strength grade is now higher than BDO’s D, which bagged a “positive” outlook due to better asset quality, improving profitability and capitalization that benefitted from a $1 billion rights issue last year.

The bank credit assessment (BCA) rating, which takes into account subsidies from the government and bank affiliates, were raised to Ba1 from Ba2 for BPI and Metrobank. BDO’s BCA rating was steady at Ba2.

This is due to the bank’s “improved financial fundamentals, particularly asset quality and loss-absorption capacity,” Moody’s pointed out.

For instance, both lenders’ bad loan ratio -  2.1 percent for BPI and 1.8 percent for Metrobank - stood below the industry average.

BDO, for its part, has a “weaker” asset quality- or more bad loans- compared to its peers, explaining the lower BCA rating as against BPI’s and Metrobank’s, Moody’s said.

Nevertheless, BDO kept its Ba1 rating for long-term foreign currency senior unsecured debt, while Metrobank’s local currency subordinated debt rating was retained at Ba2.

Moody’s said the banks’ ratings are “in line” with the Philippines’ sovereign rating of Baa1, one notch below investment grade with a positive outlook, and the high exposure of the banks to the local market.