PSBank gets triple-A credit rating from PH Rating Services Corp.

Screengrab from https://www.psbank.com.ph

MANILA, Philippines -—The Metrobank group’s thrift bank arm Philippine Savings Bank has obtained a triple-A credit rating from local credit watcher Philippine Rating Services Corp. for a proposed debt issuance of up to P3 billion.

In a press statement on Thursday, PSBank said it had given a PRS Aaa rating – the highest rating on its scale – on PSBank’s proposed subordinated notes. The rating for PSBank’s outstanding P3 billion unsecured subordinated notes was likewise maintained at PRSAaa.

A rating of PRS Aaa means that the credit is deemed of the “highest quality with minimal credit risk” and that the obligor’s capacity to meet its financial commitment on the obligation is “extremely strong.”

“The ratings reflect PSBank’s very good quality management; its aggressive, highly visible competitive strategy; very satisfactory asset quality; and sound capitalization.  The ratings also consider the continuing favorable outlook for the domestic consumer market where PSBank has established a strong franchise,” Philratings said.

As of December 31, 2013, PSBank was the country’s second largest thrift bank in terms of assets, loans, deposits, and capital.  Based on its published balance sheet, PSBank’s market share of the thrift banking sector was 16.7 percent of assets, 16.8 percent of deposits, and 19.6 percent of loans as of December 31, 2013. PSBank generates majority of its earnings from its retail and consumer business, where it has established a strong market presence.

“Throughout the years, PSBank has taken an innovative and customer-focused approach to doing business, thus creating a strong market franchise relative to competition. Building its customer base, expanding its distribution channels, and introducing new products and new business initiatives are priorities of PSBank,” Philratings said.

For the year 2013, PSBank opened four branches and installed 19 additional automated teller machines (ATMs), ending the year with a total of 224 branches and 551 ATMs.

Philratings said PSBank’s continued aggressive branch expansion was seen to further solidify the bank’s market presence and enhance its brand equity.

In terms of asset quality, the credit watcher noted that PSBank’s gross non-performing loan ratio (NPL) ratio was kept at a low, single-digit level as of the end of 2013. In PhilRatings’ view, this reflected the bank’s “timely and appropriate credit risk management policies and collection strategies.”

PSBank was also seen more than adequately capitalized, based on its capital adequacy ratio (CAR) of 16.9 percent as of the end of 2013, which is also well above the regulatory minimum of 10 percent.

“Going forward, PSBank’s capitalization is expected to remain sound. Future capitalization efforts are expected to mainly support the bank’s portfolio expansion,” Philratings said.

Philratings said PSBank was likewise operating in an environment supported by a fast-growing economy.

“Given the general consensus that the Philippine economy will likely continue with its growth going forward, new and bigger opportunities for financing activities and investments are expected. With overseas Filipino remittances and domestic consumption remaining as two of the major drivers for economic growth, thrift banks are seen to be in a good position to benefit given their core activities of retail and consumer banking,” Philratings said.