Moody’s affirms RCBC, PNB credit ratings

MANILA, Philippines - Moody’s Investors Service has affirmed the stability of the credit ratings of Rizal Commercial Banking Corp. (RCBC) and Philippine National Bank (PNB) due to the improvement in their deposit levels after raising more capital.

In a statement, Moody’s confirmed the Ba2/NP foreign currency deposit ratings of RCBC, and changed the outlook to positive from stable.

At the same time, Moody’s revised the outlook on the D- stand-alone bank financial strength rating (BFSR) of RCBC — equivalent to a baseline credit assessment (BCA) of ba3 — to positive from stable.

“The positive outlook on RCBC’s Ba2/NP foreign currency deposit ratings reflects the ongoing improvements in the bank’s credit profile, and the expectation that it will continue to improve, especially once it is able to implement its capital raising plan,” Moody’s said.

“Moody’s views the bank’s stand-alone financial profile as strong for its ba3 BCA. The positive outlook on RCBC’s D- BFSR considers the bank’s improved asset quality profile as a result of the sale in 2013 of P4.8 billion in legacy non-performing loans and non-performing assets,” it added.

At the same time, Moody’s noted that RCBC’s capital buffer has improved, following private placements last year which raised a total of P8.2 billion. These transactions have resulted in an improvement in RCBC’s overall credit profile, which has become comparable to other ba2 and ba3 regional peers.

“The bank’s ability to implement its capital raising plans and maintain capital levels above the minimum capital requirements under Basel III will be key to its ability to support its business growth targets,” Moody’s said.

Meanwhile, Moody’s said it also changed the outlook for PNB to positive from stable.

“At the same time, Moody’s has raised PNB’s bank financial strength rating (BFSR) / baseline credit assessment (BCA) to D-/ba3 from E+/b1 to reflect the improvement in the bank’s financial profile, following the merger with Allied Banking Corp. (ABC). The outlook on PNB’s BFSR is maintained as positive,” it said.

“The positive outlook on PNB’s Ba2/NP foreign currency deposit ratings reflects the ongoing improvements in the bank’s credit profile, as well as expectations that further improvements in its financial performance will likely bring its credit profile in line with the industry average over the next 18-24 months. In particular, its profitability and asset quality are expected to improve as a result of the completion of the integration process,” it said.