PhilRatings affirms PSBank’s top credit grade

A LOCAL debt watcher affirmed the top corporate rating of Philippine Savings Bank (PSBank) on the back of continued growth in the lender’s core interest income and strong market position.

In a statement sent to reporters over the weekend, the thrift bank secured a PRS Aaa (corp.) rating from the Philippine Rating Services Corp. (PhilRatings), or the highest corporate credit rating on the firm’s scale.

This means that the lender has a “very strong capacity” to meet is financial obligations within a one-year horizon.

The credit rater took into consideration PSBank’s solid market position, its well-defined and forward-looking strategy, highly-experienced management as well as continued growth in core interest income, attributable to loan portfolio expansion.

PhilRatings added that the savings banking arm of Metropolitan Bank & Trust Co. is a “significant” player in the consumer lending market driven by its car loan portfolio, which is expected to log a “moderated but still positive” growth this year.

PSBank’s consumer lending, accounting for 91.4% of its total loan book as of end-2018, tallied a compound annual growth rate (CAGR) of 14.2% between 2014 and 2018. Broken down, the CAGRs of PSBank’s auto and mortgage loans stood at 18.2% and 9.6%, respectively.

“Despite the significant decline in auto sales resulting from the implementation of the Tax Reform for Acceleration and Inclusion Act, PSBank managed to keep its market share of about 17.0%, which serves as an indication of the bank’s solid franchise in its chosen market,” PhilRatings said.

In a previous interview, PSBank President Jose Vicente L. Alde said the lender expects its consumer loans to “be better than last year’s” on the back of easing inflation and other factors, which will translate to softer loan rates.

PhilRatings added that the bank’s net interest income has been posting double-digit growth from 2015-2017, in line with the expansion of its loan portfolio.

Meanwhile, PSBank’s “solid” market position is seen to be supported by the digitalization of its products, channels and processes, enhancing customer experience and improve operational efficiency.

“[R]ecent product and service offerings have become more technology-based, as the bank prepares for the next generation of bank customers, who are seen to have more choices and be more demanding,” PhilRatings noted.

The debt watcher added that the digitalization push as well as the “solid” industry experience of its management headed by Mr. Alde will strongly support the lender’s competitive position going forward.

PSBank tallied a P2.7-billion net income in 2018, flat from the previous year’s level, even as its lending and deposit-taking businesses continued to expand.

The Ty-led savings lender ended 2018 with 250 branches, 575 automated teller machines and total assets worth P237.7 billion.

Shares in PSBank stood at P58 on Friday, up 70 centavos or 1.22% from the previous close. — K.A.N. Vidal