Fitch revises credit rating of 5 Philippine banks to stable

MANILA, Philippines — Fitch Ratings revised the credit rating outlook of five of the country’s biggest banks in terms of assets to stable from negative, reflecting a similar move on the sovereign rating of the Philippines.

Fitch lifted the outlook for BDO Unibank Inc., the largest bank in the Philippines, to stable from negative and affirmed its credit rating of BBB- or a notch below the BBB rating of the Philippines.

The affirmation of BDO’s investment grade rating took into account its high systemic importance as the largest bank in the country, with market share of around 18 percent of system assets and deposits, as well as the state’s moderate fiscal flexibility.

The debt watcher also revised the outlook of Ayala-led Bank of the Philippine Islands (BPI) to stable from negative and affirmed its BBB- credit rating.

“Our view takes into consideration BPI’s high systemic importance as one of the top three largest privately-owned banks in the Philippines, with a market share of around 12 percent in system deposits, and the state’s improving fiscal flexibility, as reflected in the revision of the sovereign rating outlook to Stable,” it said.

Fitch also upgraded the outlook of Metropolitan Bank & Trust Co. (Metrobank) and affirmed its BBB- investment grade credit rating.

“We believe that the Stable Outlook on the sovereign rating indicates the state’s improving ability to support the bank in times of need. The long-term issuer default ratings and government support rating on Metrobank are one notch below the sovereign rating, reflecting its high systemic importance as one of the three largest private commercial banks in the Philippines, with market share of about 12 percent in system assets and deposits,” it said.

According to Fitch, it also revised the credit rating outlook of both state-run Land Bank of the Philippines and Development Bank of the Philippines to stable from negative.

The debt watcher revised the outlook for Landbank’s long-term issuer default rating to stable from negative and affirmed its BBB rating, underpinned by  expectation of state support to the bank, as indicated by its government support rating.

“This considers the bank’s strategic and growing policy roles, 100 percent state ownership, as well as its systemic importance as the largest state-owned bank in the country, with market share of about 14 percent of system assets,” Fitch said.

The credit rating agency added that the rating also considers the state’s improving ability to support the bank, in times of need, as reflected in the revision of the sovereign rating outlook to stable.

“Details about the proposal to merge Landbank with the Philippines’ second-largest state-owned bank remain fluid, but we expect the state’s propensity to support Landbank to remain intact in the interim,” it said.

It also raised the outlook for government-owned DBP to stable from negative and affirmed the bank’s BBB rating, reflecting the view of a high probability of state support in times of need.

“The ratings take into consideration the bank’s strategic role as the country’s infrastructure bank, the 100 percent state ownership, and our assessment of the state’s improving ability to support the bank,” Fitch said.