Moody’s affirms BPI’s credit rating, outlook

MOODY’S Investors Service has affirmed its investment-grade rating for Bank of the Philippine Islands (BPI), assigning a “stable” outlook, on the back of its strong capital and liquidity.
In a statement on Thursday, the global debt watcher said it has maintained BPI’s long-term local and foreign currency deposit as well as foreign currency senior unsecured debt ratings of Baa2, a notch above the minimum investment grade and at par with the country’s credit rating.
Moody’s likewise maintained its short-term local and foreign currency deposit and issuer ratings at P-2, while baseline credit assessment (BCA) stood at baa2.
Counterparty risk assessments were also affirmed at Baa1(cr)/P-2(cr).
Moody’s said its ratings are based “on its assessment that the bank will likely receive support from the Philippine government in times of need.
Moody’s said that BPI’s Baa2 deposit rating is underpinned by the bank’s BCA, which took into account the Ayala-led lender’s “consistently robust capital and liquidity,” reflecting its “disciplined and prudent” growth.
In assessing BPI’s BCA, Moody’s also considered the lender’s track record of above-industry-average risk-adjusted profitability backed by its presence in consumer and corporate segments as well as high credit risk concentration in its asset book.
“BPI’s asset quality has improved over the last few years because new non-performing loan (NPL) formation remain low, while the bank has also been able to resolve its legacy problem issue,” according to the credit rater’s statement.
BPI’s non-performing loans ratio increased slightly to 1.82% as of September from the 1.8% recorded the previous quarter.
Moody’s added that it is unlikely to raise BPI’s deposit rating ahead of the country’s rating given the high correlation of risk between the lender and the Philippines.
For the lender’s BCA to be raised, the debt watcher said BPI must consistently reduce its non-performing assets, improve profitability or have higher levels of loss-absorption capacity, apart from the upgraded sovereign rating.
BPI reported a P5.98-billion net income in the third quarter on the back of the double-digit expansion of its net interest earnings.
It has raised $600 million through a drawdown from its $2-billion medium-term note program last August. The five-year notes, which carry 4.25% coupon rate, was assigned a Baa2 rating by Moody’s.
BPI shares was at P84.50 apiece on Thursday, up P1.90 or 2.3%. — Karl Angelo N. Vidal