Moody’s Affirms RCBC, PNB Ratings, Changes Outlook to Positive

Moody’s Investors Service affirmed Tuesday the long-term ratings of the Philippine National Bank (PNB) and the Rizal Commercial Banking Corporation (RCBC) and changed the outlook of the banks ratings from stable to positive.

In a statement, the debt watcher said the ratings action on both banks are based on the financial institutions’ ongoing improvements on their respective credit profile and projected improvements in financial performance.

Both banks currently have Ba2/NP foreign currency deposit ratings from the debt watcher.

Aside from the affirmation of PNB’s rating, the debt watcher also raised its bank financial strength rating (BFSR) / baseline credit assessment (BCA) to D-/ba3, with positive outlook, from E+/b1 to reflect the improvement in the bank’s financial profile, following the merger with Allied Banking Corporation (ABC, unrated)”

Moody’s explained that “although PNB’s asset quality is still weaker than the rated Philippine banks average, its high levels of capitalization and loan loss coverage provide sufficient loss absorption capacity at its current rating levels to withstand systemic stresses over the next 12-18 months.”

Relatively, the credit rating agency revised the outlook of RCBC’s D- standalone BFSR, which it said is “equivalent to a baseline credit assessment (BCA) of ba3 — to positive from stable.”

It considers the bank’s standalone financial profile as “strong” for its credit profile after noting that the bank’s capital buffer has improved.

“The bank’s ability to implement its capital raising plans and maintain capital levels above the minimum capital requirements under Basel III will be key to its ability to support its business growth targets,” it added. (PNA) LGI/JS/UTB