PSBank debt notes get high rating

Philippine Savings Bank has obtained a sterling credit rating from local credit watcher Philippine Rating Services Corp. for P3 billion in debt notes qualifying as tier 2 or supplementary capital which the thrift bank plans to offer in early 2012.

Obligations rated by “PRS Aaa,” the highest rating in PhilRatings’ scale, are deemed of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is considered “extremely strong.”

In a statement on Wednesday, Philratings said the rating reflected PSBank’s strong management team and deposit generation ability, as well as its sound asset quality. The rating agency said it also considered the “still favorable, albeit moderated outlook for domestic consumer credit, where PSBank has a solid market franchise.”

It was noted that PSBank had been pursuing a strong growth strategy in recent years, while maintaining its focus on the consumer retail markets. As of end-2010, about 41 percent and 33 percent of PSBank’s loans were for auto and housing, respectively.

“The continued innovation and development of products and services, as well as the expansion of delivery channels have supported the bank’s solid market position, amid the growing number of players in the consumer business and vigorous campaign of competitor banks to acquire a bigger share of the market. Investments in information technology (IT) have also been a source of competitive advantage, allowing for efficiencies in operations and simplifying customer transactions to provide faster turnaround time,” Philratings said.

The rating firm said PSBank’s funding was supported by a large proportion of retail funds, as indicated by its high deposits to liabilities ratio of 94.6 percent as at end-2010, a ratio that compared favorably with the thrift banking sector ratio of 90.9 percent.

PhilRatings expects the bank’s various deposit campaigns and its expanded branch and ATM network to continue supporting deposit generation, while funding cost is seen to go down as the share of low cost deposits to total deposits increases going forward.

It was also noted that PSBank’s asset quality continued to show improvement in 2010. Nonperforming assets (NPAs) ratio went down with growth in loan portfolio offsetting marginal increases in nonperforming loans (NPLs) as well as repossessed assets. Taking into account loan loss reserves, NPL and NPA ratios were at low single-digit levels as of end-2010.

PSBank’s loan portfolio was also described as “highly diversified” in terms of individual borrowers.