Moody’s Investors Service also lifted four Philippine banks to investment grade status following its upgrade for the country.
“Moody’s Investors Service has upgraded the deposit ratings of four Philippine banks to ‘Baa3/Prime-3’ from ‘Ba1/Not Prime,’ which means they are now investment grade, following the rating upgrade of the Government of the Philippines’ debt ratings to ‘Baa3’ from ‘Ba1’,” the credit ratings agency said in a statement.
It noted that the banks whose deposit ratings are affected are BDO Unibank Inc. (BDO), Bank of the Philippine Islands (BPI), Land Bank of the Philippines (LBP) and Metropolitan Bank and Trust Co. (Metrobank, or MBT).
“The rating actions are in line with the upgrade of the Philippines sovereign’s bond ratings to ‘Baa3 from Ba1’,” it stated.
Moody’s said that some of the positive drivers of the sovereign rating action are reflected in an improved operating environment for the Philippine banking system, particularly its major banks.
It added that underpinning the banking system’s improved asset quality were the robust growth of the economy; the strong domestic consumption that has been supported by steady remittance inflows, and in turn, contributed to the banks’ healthy credit growth and profitability; well-anchored inflation; and no strong signs of overheating in asset markets.
“All of these positive dynamics of the operating environment have resulted in the upward revisions of the BCAs of BPI, MBT and BDO,” it explained.
Furthermore, Moody’s said that the improved creditworthiness of the Philippine government also results in its stronger capacity to support the banks.
“This has resulted in the upgrades to ‘Baa3’ of BDO’s and LBP’s deposit ratings. Moreover, the outlooks on all four banks’ deposit ratings are positive, reflecting Moody’s expectation that further upward pressure on the Philippine government’s rating would likely result in upward movements on these four bank ratings given Moody’s support assumptions,” it added.