Moody’s keeps ‘Baa2’ rating on 3 Philippine banks
MANILA, Philippines — Moody’s Ratings raised its outlook on Security Bank to “stable” from “negative,” citing easing capitalization pressures, and affirmed the same outlook for Philippine National Bank (PNB) and China Banking Corp.
In separate releases on Monday, the ratings firm kept its “Baa2” credit ratings on the three Philippine banks, citing strong liquidity even as loan quality faces some pressure.
A Baa2 rating from Moody’s is an investment-grade rating signifying “moderate credit risk”. It suggests that the issuer has adequate capacity to meet financial commitments.
For Security Bank, the shift from a negative to stable outlook allayed the risk of a rating downgrade, which would have resulted in higher borrowing costs for the company.
Moody’s said the lender’s capitalization should provide a buffer against modest deterioration in asset quality and profitability in 2026 and 2027.
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“The affirmation also reflects the bank’s strong liquidity which balances its modest funding,” the agency said.
“We expect asset quality to weaken moderately in 2026-2027, driven by continued seasoning pressures, the residual impact of the flood-control probe, and the rising cost of living, which will weigh on the repayment capacity of retail borrowers,” it added.
PNB asset quality
Meanwhile, Moody’s said its affirmation of its stable outlook on PNB reflected the bank’s robust capitalization and strong profitability, which offset its modest, albeit improving, asset quality.
READ: PNB profit up 20% to P25.3B in 2025
The action also considered the bank’s strong and stable deposit funding from its extensive branch network, and high level of liquidity.
“The bank’s net interest margin will benefit from its effective management of funding costs, while downward repricing pressures on its loan book will be offset by growth in higher-yielding commercial and retail loans, as well as a sizable proportion of fixed-rate corporate loans,” Moody’s said.
“We expect credit costs to increase modestly as the bank expands its unsecured retail loans, but remain low, supporting its overall profits,” it added.
China Bank
Lastly, Moody’s said Chinabank’s stable outlook reflected its expectation that the bank’s credit profile will remain broadly stable over the next 12 to 18 months. At the same time, it considered the bank’s strong capitalization, as well as its modest funding and liquidity.
READ: Chinabank profit hits record P28B in 2025
“We expect asset quality to deteriorate mildly over the next 12 to 18 months, due to seasoning of the retail loans portfolio, impact of the flood-control probe, and the rising cost of living, which will weigh on the repayment capacity of retail borrowers,” the debt watcher said.
“CBC remains well capitalized and its capitalization will remain a credit strength. We expect capitalization to remain stable over the next 12 to 18 months, as internal capital generation will be in line with capital consumption,” it added. /dda
