Fitch Ratings has affirmed, upgraded, and revised the credit ratings of five Philippine banks on the back of their credit strength.
In a statement, Fitch said it has affirmed the ratings of Bank of the Philippine Islands (BPI), Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LandBank).
The ratings agency said that BPI’s ratings are supported by its strong domestic franchise, solid financial performance, strong capitalization and track record of prudent management through economic cycles.
Fitch also said that the ratings of DBP and LandBank reflect their satisfactory financial profiles, albeit with asset-related and state-influence risks, including policy-oriented loans.
“Despite their policy roles, both DBP and LandBank still adopt a largely commercial approach, including towards credit risk assessment,” it said.
The agency has also upgraded Metropolitan Bank & Trust Co.’s (Metrobank) rating to investment grade or ‘BBB-’ from ‘BB+’, on the back of the bank’s domestic presence and funding base, satisfactory record in asset quality and profitability as well as improved loan-loss reserves.
At the same time, Fitch revised BDO Unibank Inc.’s (BDO) ratings outlook to positive from stable and affirmed its international issuer default at ‘BB+’ and viability rating at ‘bb+.’
“BDO’s ratings reflect its market-leading domestic presence, funding strength, sound capitalization and reserves, and modest but improving profitability and asset quality,” it said.
Fitch also said that the ratings outlooks for BPI, DBP, LandBank and Metrobank are stable, and these banks are expected to likely maintain steady risk profiles over the near- to medium-term, underpinned by a robust domestic economy, manageable corporate leverage and supportive domestic interest rates.
The agency added that the positive outlook on BDO reflects its view that recent overall improvements in BDO’s asset quality and profitability, underpinned by a supportive operating environment, “have brought BDO’s credit profile closer to those of ‘BBB’ range banks globally.”
However, it warned that BDO’s loan growth has been relatively higher than the industry in real estate-related lending, and around a quarter of its trading portfolio is held in corporate bonds—which could make the bank more vulnerable in a downturn.
“These factors, taken together with BDO’s core funding, liquidity and capitalization strengths contribute to the revision of BDO’s outlook to positive,” it said.