S&P assigns BBB+ as maiden rating to BPI

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File photo shows a branch of the Bank of the Philippine Islands in Makati City.

S&P Global Ratings assigned its “BBB+” long-term and “A2” short-term issuer credit ratings (ICR) to Bank of the Philippine Islands (BPI), reflecting the bank’s “dominant market position as the third-largest bank in the Philippines.” The outlook on the long-term rating is stable.

S&P said the rating was based on four Bank-Specific Factors comprising the bank’s stand-alone credit profile.

In particular, BPI achieved “strong, +1 notch” rating for Business Position and Capital and Earnings, an “adequate, neutral position” for Risk Position, an “average” for Funding and “strong, neutral position” for Liquidity.

“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,” S&P said.

“BPI’s funding profile is underpinned by its extensive branch network, well-established franchise, and record of strong depositor confidence. We assess the bank’s stand-alone credit profile [SACP] to be BBB+,” it added.

This is the first credit rating assigned by S&P to the Bank. BPI’s rating at BBB+ ICR is on a par with the Philippine Sovereign Rating of ‘BBB+’.

S&P upgraded the Philippine Sovereign Rating on April 30, 2019. S&P also classified the banking sector of the Philippines in group “5”; under their Banking Industry Country Risk Assessment (Bicra).  The entire ratings process took about three months, from May 2019 to August 2019, in coordination with the bank’s ratings advisor consultant, Mizuho Bank Ltd.

Image credits: Nonie Reyes


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