Moody’s affirms BPI credit rating
Moody’s Investors Service on Thursday affirmed Bank of the Philippine Islands’ (BPI) investment grade credit rating of “Baa2” with a stable outlook.
In a statement, the credit rating agency said this also meant there was a “very high probability” that the government would extend support to BPI if needed.
“The ratings outlook is stable,” it said, adding that the score was not raised because the bank’s baseline credit assessment (BCA) of baa2 was already at the same level as the sovereign rating.
The BCA took into account BPI’s consistently robust capital and liquidity that reflect disciplined and prudent business growth.
“The BCA also considers the bank’s track record of above-industry-average risk-adjusted profitability, supported by its dominant presence in the domestic corporate and consumer segments; as well as the high credit risk concentration in BPI’s asset portfolio, which exposes the bank to vulnerabilities in single-name credit events or industry-specific cyclicality,” Moody’s said.
The debt watcher noted that BPI’s asset quality had improved over the last few years. New non-performing loan formation remained low at a ratio of 1.8 percent as of June 2018 while the bank was also able to resolve legacy problem loans.
“BPI’s core profits are supported by strong loan growth, a stable net interest margin and low credit costs,” it added, with return on assets also fairly stable at about 1.2 percent — higher than the average of Moody’s rated banks in the Philippines of 1.1 percent.
BPI’s stable core earnings and access to the capital market underpinned the health of its capital base as its common equity tier 1 ratio rose to 16.4 percent at the end of June 2018, mainly boosted by a stock rights offering completed in April 2018.
The bank earlier this week reported that its net income reached P17.01 billion in the first nine months of 2018, down 0.23 percent from a year earlier.
BPI shares rose by P1.90 to P84.50 apiece on Thursday amid a 0.43-percent rise for the Philippine Stock Exchange index.
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