RATINGS firm Moody’s Investors Service has upgraded the credit rating of Philippine National Bank (PNB) to investment grade to reflect its improved credit profile.
PNB’s long- and short-term ratings were raised two notches to Baa3/P-3 from its previous rating of Ba2/NP.
Moody’s also raised the baseline credit assessment (BCA) of PNB to ba3 from its prior rating of ba1, validating the bank’s efforts in fortifying its business and establishing its drive to achieve its long-term corporate goals of high profitability.
“The upgrade of the bank’s BCAs and Adjusted BCA reflect improvements in asset quality profiles during a period in which new non-performing loans (NPL) formation has remained low in the Philippines,” Moody’s said in a statement.
At the end of 2014, the Philippine bank also demonstrated signs of improvement in its asset quality as its non-performing loans decreased to P9.9 billion.
PNB’s non-performing loan ratio (net of valuation reserves), based on the guidelines set by the Bangko Sentral ng Philippines (BSP), also decreased to 0.92 percent from 1.39 percent the year before.
Meanwhile, PNB’s non-performing assets also declined due to the sale of P2.2 billion worth of foreclosed properties.
Moody’s added that it was the bank’s P11.6 billion new equity raising in early 2014 that helped in improving its capital buffers.
PNB was able to raise P11.6 billion in fresh capital from a stock rights offering in February 2014, which strengthened the bank’s position under Basel III standards.
By the end of 2014, its consolidated capital position remained strong with a capital adequacy ratio (CAR) of 20.6 percent and a CET 1 (common equity tier 1) ratio of 17.4 percent, exceeding the minimum 10 percent and 8.5 percent required by the BSP, respectively.
“Its high levels of capitalization and loan-loss coverage provide sufficient loss absorption capacity at its current rating levels to withstand systematic stresses over the next 12 to 18 months,” said the ratings provider.
As of December 2014, PNB’s consolidated assets amounted to P625.4 billion, making it the fourth largest private bank in the country.
The bank’s net income increased 5 percent to P5.5 billion in 2014 from P5.2 billion in 2013. PNB currently has 660 branches in the country and 74 branches and offices overseas.