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Money & Banking

Moody's affirms BDO, BPI, Metrobank credit rating at one notch below investment grade

April 29, 2013 3:26pm
Debt-watcher Moody's Investors Service retained the credit rating of the country's Top 3 banks on the back of their strong capitalization and  liquidity levels as well as expectations of robust future earnings.

Ratings of BDO Unibank Inc., Metropolitan Bank & Trust Co. and Bank of the Philippine Islands (BPI) were kept at Ba1 for long-term local and foreign currency deposits with a stable outlook, Moody’s noted in a statement late Friday.

The debt watcher's metrics stated that the rating means the banks' respective debt papers are “not prime” and signifies low to moderate level of risk for investors or policyholders.  

Entities that are assigned this rating generally possess adequate reserves and are reasonably stable but not as solid as higher-rated securities or carriers, according to Investopedia.

The retained rating “reflects the strong liquidity and capitalization of the banks that continue to support the banks' credit profiles at the Ba1 rating level,” according to Moody's. 

“Moreover, 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,” it added.

Metrobank and BPI's financial strength rating and baseline credit assessment were raised to D+ from D, with a stable outlook.

“Both banks have better asset quality metrics than the Philippine banking system-average and compare favorably with other Moody's D+/Ba1 rated banks,” Moody's noted.

According to Moody's metrics, D+ means “modest intrinsic financial strength” that requires “some” support at times.

The two banks' financial strength is now higher than BDO's D which was given a positive outlook on improving asset quality, profitability and capitalization.

In a disclosure to the Philippine Stock Exchange Monday, Metrobank president Fabian Dee said “the recent rating upgrade by Moody's reflects positively on our strategy to maintain superior asset quality and for prudent balance sheet expansion.

“We have built the foundations for long-term sustainable growth, and we are well positioned to capitalize on the prospects of the vibrant economy,” Dee added.

Moody's said the three banks' ratings were in line with the Philippines' sovereign rating at one notch below investment grade.

On March 27, Fitch Ratings hiked the Philippines credit rating to investment grade, with analysts predicting that Moody's and Standard & Poor's will soon follow suit. — VS, GMA News
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