MANILA, Philippines — Japan Credit Rating Agency (JCR) has affirmed the investment grade rating and stable outlook of Security Bank Corp. on the back of its relatively robust domestic business base, high profitability and solid capital base.
The debt watcher said it maintained its A- rating on Security Bank as its financial durability remained strong, indicated by its high loan-loss provision coverage ratio and capital adequacy ratio in addition to its high profitability ensured by a high net interest margin.
Sanjiv Vohra, president and chief executive officer at Security Bank, said the affirmation of the bank’s investment grade credit rating by JCR is a testament to the bank’s strength despite the difficult times.
“Our strong capital position is an important pillar which both our customers and employees can rely upon to weather the challenges brought by the COVID-19 pandemic. That capital will continue to be deployed to support our clients’ pandemic recovery efforts, employee health and safety initiatives, and investments in systems and technology to deliver on our BetterBanking promise,” Vohra said.
In a report prepared by JCR chief analyst Yoshihiko Tamura and analyst Shinichi Endo, the debt watcher said the bank’s profitability is expected to remain solid due to its high net interest margin and increased lending to be brought by economic recovery.
On the other hand, the debt watcher said there is room for improvement in the bank’s high concentration to large borrowers, most of them have a relatively good credit standing and the impact of the pandemic on them has so far been minimal.
Despite the increase in the bank’s non-performing loan (NPL) ratio to 3.9 percent last year from an average of one percent in the past few years, JCR said the level would remain manageable despite the elevated level in the short-term due to a lingering economic slump.
“JCR holds that the ratio will continue to be controlled at a manageable level if the economy recovers steadily as the pandemic subsides because the bank has strengthened its credit management for individual borrowers,” it said.