International rating agency Fitch Ratings has affirmed the stable ratings of Banco de Oro Unibank Inc. (BDO), Bank of the Philippine Islands (BPI), China Banking Corp. (China Bank), Metropolitan Bank and Trust Co. (Metrobank), and the Philippine National Bank (PNB).
“Despite the more challenging operating environment ahead, the credit profile of the five Philippine banks is expected to remain largely stable,” Fitch said in a statement.
After completing the legal merger with Equitable PCI Bank in May 2007, the ratings of the enlarged BDO reflect its improved, though below-average, core profitability and modest balance sheet strength.
“With the operational rationalization substantially completed, a sustained improvement realized from the merger would be among the key considerations for a ratings upgrade in future,” Fitch said, thus reaffirming BDO rating at ‘C/D’ and Support at ‘3’.
BPI’s ratings reflect its stable profitability with a diversified revenue base, its good franchise among the largest Philippine banks and its satisfactory balance sheet strength. It retained its Individual at ‘C’ and Support at ‘3’.
China Bank maintained its long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘BB’, its National Long-term Rating at ‘AA-(phl)’ (AA minus(phl)), Individual at ‘C/D’, Support at ‘4’ and Support Rating Floor at ‘B+’. The outlook is stable.
The international credit rating agency added that China Bank’s ratings was premised on the bank’s good balance sheet strength and core profitability, thanks to its strong franchise among the Chinese-Filipino community.
The rating outlook for Metrobank is stable.
Metrobank retained the long-term foreign currency IDR at ‘BB’, short-term foreign currency IDR at ‘B’, Individual at ‘D’, Support at ‘3’ and Support Rating Floor at ‘BB-’ (BB minus).
Its ratings reflect improved albeit still weak balance sheet strength, moderate profitability and its size as the largest bank in the country.
Meanwhile, PNB kept the Individual at ‘D/E’ and Support at ‘3’.PNB’s Individual Rating reflecting the bank’s weak balance sheet strength and limited profitability, even after taking into account the merger with Allied Banking Corp., as the latter only has a slightly better credit profile than PNB’s and is about two-thirds the size of PNB.
“Integration risk is a factor although a successful merger of the two banks may provide positive rating momentum, particularly if combined with capital strengthening and a reduced exposure of impaired assets,” Fitch explained.