Moody’s affirms Metrobank, BPI investment ratings

MANILA, Philippines — Moody’s Investors Service has affirmed the investment grade rating of Ty-led Metropolitan Bank & Trust Co. (Metrobank) and Ayala-led Bank of the Philippine Islands (BPI).

The debt watcher affirmed the Baa2 long-term deposit ratings of Metrobank and BPI on the back of stable outlook reflecting expectations that both banks’ credit profiles would remain robust over the next 12 to 18 months.

“The rating affirmations of both BPI and Metrobank reflect the banks’ strong capitalization, which provides adequate buffer against financial shocks, strong funding and liquidity, supported by leading domestic franchises,” the credit rating agency said.

It also expects the asset quality and profitability of both banks to improve over the next 12 to 18 months.

Likewise, the non-performing loan (NPL) ratios of Metrobank and BPI are seen declining to around two percent by end 2023 as the country continues to recover from the pandemic-induced recession.

Moody’s, however, pointed out that significant loan concentration to the domestic corporates remains a key risk factor for both banks.

It sees the return on assets of both banks improving to around 1.2 percent over the next 12 to 18 months, as net interest margins widen with rising interest rates, and provision expenses decline with the improving asset quality.

Despite the decline in capital ratio as loan growth recovers, Moody’s said the capitalization of both banks remaining at a still-strong level of around 15 percent over the next 12 to 18 months.

“Their funding structures will remain strong due to their strong deposit franchises. Both banks are largely funded by low-cost sticky customer deposits. Liquidity will remain adequate,” Moody’s added.

The debt watcher said the likelihood of support from the Philippine government would remain very high for both Metrobank and BPI, given their systemic importance, as reflected by their system market shares by total assets of 11.3 percent and 10.9 percent, respectively, as of end 2021.

The total assets of Metrobank stood at P2.5 trillion, while that of BPI reached P2.4 trillion as of end December last year.