The PRS A rating implies that the issue has favorable investment attributes and is considered as an upper-medium grade obligation. "Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future," Philratings said.
Plantersbank’s Tier-2 capital note issue has a term of 10 years with a call option after the fifth year. It involves a peso tranche amounting to P536 million and a dollar tranche equivalent to $8.4 million.
The Tier-2 issue will allow the bank to access a higher amount of facilities from its wholesale funding institutions, thereby enhancing future business growth.
In assigning the rating, Philratings considered Plantersbank’s strong market position in its chosen niche – that of serving and concentrating on the small and medium sector; its satisfactory funding profile given the improving level of customer deposits and its ready access to wholesale (program) funds.
Philratings also took into consideration Plantersbank’s strategic benefits derived from its active partnership with solid international financial institutions, namely the International Finance Corp. (IFC), Netherlands Development Finance Co. (FMO), and Asian Development Bank (ADB). These three institutions have a combined 36.3 percent stake in the bank and are all rated AAA by Standard & Poor’s on the global scale.
Likewise considered was Plantersbank’s profitability and asset quality. For 2004, unaudited net income amounted to P400.7 million, representing a return on average equity (ROAE) of 18.9 percent and a return on average assets (ROAA) of 1.3 percent.
The bank’s cost-to-income ratio was at 62.8 percent while its non-performing assets (NPA) ratio was at 24 percent as of end-2004.
"Plantersbank’s NPA ratio is expected to improve further going forward as it takes steps to reduce its non-performing loans and ROPOA (real and other properties owned and acquired) and this includes looking at the possible sale of a significant amount of ROPOA to a special purpose vehicle (SPV) over the short-term," Philratings said.
With the Tier-2 capital note issue, Plantersbank’s capitalization ratio stood at 17.5 percent as of end-2004 compared to the Bangko Sentral ng Pilipinas’ (BSP) required 10 percent.
Plantersbank intends to continue expanding its earning asset base, accelerate deposit growth, as well as achieve greater operating efficiency, while still keeping its focus on the SME market. Some of its recent product introductions are the SME Proposition, an integrated cash management service bundled with web-based business solutions; Mortgage Optimizer, a multipurpose loan combination facility; and Handy Credit, a personal loan product for employees, businessmen, and professionals.
It is the country’s largest private development bank with total consolidated assets of P30 billion, capital of P2.9 billion and network of 70 branches.