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FITCH Ratings Inc. has affirmed the credit ratings of five
Philippine commercial banks, but cited weaknesses in their balance
sheets and profitability.
Of the five commercial banks, Fitch cited
improvements in China Banking Corp. and Bank of the Philippine
Islands (BPI), but said otherwise for Metropolitan Bank and Trust
Co. Philippine National Bank (PNB) and Banco de Oro Unibank (BDO).
The rating company however expects the five
banks’ credit profile to remain stable.
“In general, despite the more challenging
operating environment ahead, the credit profile of the above
Philippine banks is expected to remain largely stable,” Alfred
Chan, Fitch analyst, said in a statement.
Fitch said China Bank’s rating reflects
balance sheet strength and core profitability driven by a strong
franchise in the local Chinese community. China Bank reported a
decline of 6.72 percent in net income in the first quarter to
P713.66 million due to higher integration costs with Manila Bank
Corp., interest expenses, and lower trading gains.
BPI’s rating meanwhile reflects satisfactory
balance sheet and stable profitability as it has diversified its
revenue base and maintains a good franchise, Fitch said.
It said Metrobank’s ratings reflect a weak
balance sheet and moderate profitability. As for PNB, the credit
rating company said the lender’s merger with Allied Banking Corp.
is unlikely to strengthen its balance sheet and profitability,
despite the latter’s better credit profile.
“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
reduced exposure of impaired assets,” Chan said.
PNB reported its net income grew 48 percent to
P457 million in the first quarter of the year from P308 million in
the same period last year.
Lastly, Fitch said BDO’s ratings reflect
below-average profitability and modest balance sheet strength even
after its merger with Equitable PCI Bank.
“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,” Chan said.
-- Maricel E. Burgonio
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