PHILIPPINE Rating Services Corp. (PhilRatings) has renewed its  “PRS Aa plus” rating on Philippine Savings Bank’s (PSBank) P2-billion unsecured subordinated notes due  in 2016, assuring note holders that the issuer has a “very strong” capacity to meet its debt obligation.

The notes issued in 2006 earn 10 percent per annum for the first five years and are redeemable by 2011.

If not redeemed by the bank at the end of the fifth year, the new interest rate for the remaining five years will be based on a certain formula, which is 80 percent of the five-year fixed-rate Treasury notes as of that time, plus the step-up credit spread of 4.2815 percent per annum.

Obligations rated “PRS Aa” are of high quality and are subject to very low credit risk, according to PhilRatings, the only domestic credit-rating agency accredited by both the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission.

In a statement, the agency said the rating reflects PSBank’s key strengths such as its “strong market position” and “robust deposit origination ability,” as well as its improved capital position.

“These strengths are counterbalanced by expectations of moderate growth in profitability given a still-sluggish consumer market,” PhilRatings said. The agency reviews the rating every year.

PSBank, the consumer and retail- banking arm of the Metrobank Group, clocked a net income of P893 million for the first nine months, up 23 percent over the same period last year on higher interest income and trading gains.

The bank has projected a 17-percent increase in its bottom-line figure this year to P1.1 billion over last year’s P940 million.

Even excluding income made in August and September, interim results for the first seven months already indicated “good possibility that the bank can meet its revenue and net-income goals for 2009,” PhilRatings said.

PSBank, the biggest in terms of capital among the country’s 74 thrift banks, had total assets of P86.9 billion and a capital- adequacy ratio of 14.73 percent as of end-September, above the minimum regulatory requirement of 10 percent.

Last year shareholders, led by Metrobank, injected P2 billion in additional capital by subscribing to PSBank’s stock- rights offering.