Global credit watchdog Moody’s Investor Service has assigned a first-time credit rating of Baa2—a notch higher than entry-level investment grade—to Security Bank Corp.
This puts Security Bank at par with the rating enjoyed by the country’s biggest banks BDO Unibank, Metropolitan Bank and Trust Co. and Bank of the Philippine Islands as well as the sovereign credit rating on the Philippine government and the Bangko Sentral ng Pilipinas.
A Baa2 “investment grade” rating means the credit is subject to moderate risk while payment capacity is seen adequate.
Based on a rating action dated Aug. 29, Moody’s assigned the Baa2 rating on Security Bank’s long-term local and foreign currency deposit ratings and long-term local and foreign currency issuer ratings, both with a stable outlook.
The long- and short-term counter-party risk assessments assigned to Security Bank were likewise at Baa2.
Moody’s cited Security Bank’s asset quality profile, which the credit-watcher said compared favorably with its peer banks in the Philippines.
As of end-June, the bank’s non-performing loans (NPLs) accounted for 0.8 percent of gross loans and better than the local banking system’s average of 2.2 percent. Its coverage for NPLs was also higher than peer banks at 229 percent as of end-June.
Moody’s also cited Security Bank’s “strong capital buffers,” in turn boosted by the recent capital infusion from its new strategic partner, The Bank of Tokyo Mitsubishi-UFJ (BTMU).
BTMU, Japan’s biggest banking group, completed last April a P36.9-billion fresh capital infusion to Security Bank in exchange for a 20-percent stake in the bank, sealing what was seen as a “game-changing” partnership that would alter the local banking landscape.
Security Bank’s common equity tier 1 ratio now stood at 18.6 percent as of end-June 2016, an improvement from the 12.2 percent as of end-2015, boosted by the capital infusion from BTMU as well as retained earnings.
Moody’s pointed out that Security Bank’s “profitability metrics are stronger than its domestic peers.” Return on assets was noted at 1.4 percent at end-2015, higher than the 1-1.2 percent registered by other Moody’s-rated Philippine banks.
Security Bank is set to debut on the local stock barometer Philippine Stock Exchange index (PSEi) effective Sept. 12, replacing integrated gaming resort developer Bloomberry Resorts Corp. Earlier this year, the bank also debuted on the closely tracked MSCI Philippines index, leveling up from the “small cap” category in what many global fund managers regard as the golden benchmark for equities investing.