Fitch keeps credit rating of 5 Philippine banks

April 6, 2024 | 12:00am

MANILA, Philippines —  Fitch Ratings has affirmed the credit rating of five of the country’s biggest banks and kept its stable outlook, on the back of a likely robust economic growth over the next two years.

However, it downgraded the rating of state-run Development Bank of the Philippines (DBP) due to its contribution to the Maharlika Investment Fund.

Fitch affirmed the credit rating of BBB- a notch below the BBB rating of the Philippines, and stable outlook for Sy-led BDO Unibank Inc.

The affirmation of BDO’s investment grade rating took into account the high likelihood of sovereign support to the bank, if needed. This is because of BDO’s high systemic importance, with market share of around 18 percent of system assets and deposits, as well as the state’s fiscal flexibility.

“BDO, as the largest bank in the Philippines, has strong relationships with the leading corporates in the country, enabling it to sustain quality business volume growth and contributing to a degree of earnings stability over the course of economic cycles,” it said.

Fitch also maintained the BBB- investment grade credit rating and stable outlook of Ty-led Metropolitan Bank & Trust Co. (Metrobank) after considering the bank’s 12 to 13 percent market share in system assets and deposits.

“Metrobank is among the three largest privately owned banks in the Philippines. Its traditional strength lies in the commercial and mid-market segment that has helped the bank to maintain superior asset quality relative to the industry average and generate quality earnings over the years,” Fitch said.

The debt watcher also kept the stable outlook of Ayala-owned Bank of the Philippine Islands (BPI) and affirmed its BBB- credit rating, taking into account its 12 percent market share in system deposits.

“Improvements to its digital capabilities in recent years has helped BPI to defend its position as one of the leading privately owned banks in the country, as reflected in a growing loan market share,” the debt watcher said.

Likewise, Fitch affirmed the credit rating of government-owned Land Bank of the Philippines (Landbank) at BBB, which was underpinned by expectations of state support to the bank, as indicated by its government support rating.

“This takes into consideration the bank’s strategic and growing policy role, 100 percent state ownership as well as its systemic importance as the largest state-owned bank in the country, with market share of about 14 percent of system assets,” Fitch said.