Ayala-led Bank of the Philippine Islands (BPI) has bagged from global credit watchdog Standard & Poor’s a credit grade that is at par with the Philippine government’s all-time investment grade rating of BBB+, a notch away from “A” territory rating.
This is the first credit rating assigned by S&P to BPI, which recently announced a plan to return to the global bond market this year. This makes BPI the first private domestic bank in the Philippines to achieve investment grade ratings of BBB+ in both issuer credit rating and stand-alone credit profile.
The outlook on the long-term rating is stable, which means it is unlikely to change in the next 12 to 24 months.
This rating follows S&P’s upgrade on the Philippine government’s credit rating to BBB+, its highest level so far.
“The ratings reflect BPI’s dominant market position as the third-largest bank in the Philippines, its good competitive position and its strong capitalization. We expect the bank’s risk adjusted capital (RAC) ratio to be 10-11 percent over the next two years, underpinned by high-profit retention and moderation in loan growth,” S&P said in its research.
“In addition, we anticipate that BPI’s asset quality will continue to be sound, underscoring the bank’s good underwriting practices and risk control. However, a minor deterioration in asset quality is likely as the bank grows its higher-yielding, but riskier, consumer and small and midsize enterprise (SME) portfolio,” the credit rating firm said.