Moody’s Investors Service has upgraded the credit standing of two Philippine banks only recently on the basis of “consistent improvement” in the credit profiles of the lenders.
In a report, Moody’s raised the long- and short-term deposit ratings of the Philippine National Bank (PNB) and the Rizal Commercial Banking Corp. (RCBC), and attributed the decision to changes in their credit profiles backed by favorable operating conditions in the country,
Moody’s particularly observed the banks’ nonperforming loans (NPLs) remained low, which it said was a reflection of the positive quality of their asset profiles. This developed as the general NPL level of the banking industry in the Philippines remained low. “Although PNB’s asset quality remains 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 to 18 months,” Moody’s said.
Moody’s also affirmed the ratings of the Land Bank of the Philippines and the Metropolitan Bank & Trust Co.. The international credit watcher said the credit standing of PNB and RCBC maybe upgraded if they maintain or
reduce further their nonperforming assets, show ability to
maintain capitalization and reduce their operating expenses, as well as improve its risk-adjusted
profitability.