Moody's affirms ratings of PNB, Allied

MANILA, Philippines - Moody’s Investor Service has affirmed its ratings on Philippine National Bank (PNB) although it said “asset quality is still weaker than the Philippine bank average.”

It also affirmed Allied Banking Corp. “underpinned by its consistently satisfactory capital and liquidity profiles, relative to similar Ba-rated peer banks.”

Earlier, the international credit rating agency noted that the merger between the two banks was positive.

Both banks were upgraded from “stable” to “positive.”

Moody’s analyst Simon Chen said that PNB has shown consistent improvements over the past three years.

Its non-performing loans fell to six percent of total loans from 8.1 percent in 2010, and from 11.3 percent in 2009.

 “Its high levels of capitalization and loan loss provisioning provide sufficient loss absorption capacity at is current rating levels to withstand systemic stresses over the next 12-18 months,” Chen said.

Chen said that the market expects substantial scope for PNB with the merger, to tighten costs and improve efficiency as it works through the integration process over the 12-18 months.

 “The assessment is predicated on PNB’s entrenched and stable market position, which in turn, underpins our view of its systemic significance in the Philippine banking sector,” he added.