CREDIT rater Moody’s Investors Service has assigned a first-time investment grade credit rating of Baa2 to Security Bank Corp. with a stable outlook.
The rating puts Security Bank on the same credit rating level as the country’s biggest banks—BDO Unibank Inc., Metrobank (Metropolitan Bank and Trust Co.) and Bank of the Philippine Islands (BPI).
The Philippine government and the Bangko Sentral ng Pilipinas (BSP) also have the same rating.
“Security Bank’s asset quality profile compares favorably with its peer banks in the Philippines,” Moody’s said in a report.
At end-June 2016, the bank’s NPLs accounted for 0.8 percent of gross loans, a result which was better than the average for the banking system of 2.2 percent. Its coverage for NPLs was also higher than peer banks, at 229 percenet at end-June 2016, the rating agency said.
Moody’s also cited Security Bank’s strong capital buffers, boosted by the recent capital infusion from its new strategic partner, The Bank of Tokyo Mitsubishi-UFJ (BTMU).
“The bank’s reported Common Equity Tier 1 ratio stood at 18.6 percent at end-June 2016, an improvement from the 12.2 percent seen at end-2015, and largely boosted by the capital infusion from BTMU, the bank’s new strategic shareholder, as well as retained earnings,” it added.
Moody’s pointed out that Security Bank’s profitability metrics are stronger than its domestic peers.
“Its return on assets was at 1.4 percent at end-2015, higher than the 1 percent to 1.2 percent registered by other Moody’s-rated Philippine banks,” it said.
Moody’s said the following factors could result in an upgrade of the bank’s baseline credit assessment (BCA): a proven ability to maintain low levels of NPLs and foreclosed assets, and to keep credit costs low; evidence that the bank can increase the contribution of its core commercial banking businesses to its overall profitability; a higher level of loss-absorption capacity.
“If the sovereign’s rating is upgraded, Security Bank’s ratings could be upgraded, if the bank’s BCA is also upgraded,” it said.