Effective December 2005, PhilRatings is applying the practice of adding to a rating a plus (+) or a minus (-) sign to modify the rating to indicate the relative position of an issue in a particular rating category.
The unsecured subordinated debt (USD) or Tier-2 issue will have a maximum term of 10 years, with a call provision after five years.
In issuing the rating, PhilRatings considered PSBank’s market position as one of the leading players in the attractive consumer banking sector, solid support from parent Metropolitan Bank & Trust Co. (Metrobank) and synergies realized from being part of the Metrobank Group, and management’s focused vision and coherent strategy.
PhilRatings likewise took into account PSBank’s strong core earnings, its good asset quality, sound funding base, and acceptable capitalization level. Other significant rating factors are: keen competition in the industry, particularly in the light of still tepid loan growth in the corporate sector, leading other banks to also focus on the consumer banking segment; potential asset quality deterioration risks resulting from the relatively aggressive growth in the bank’s portfolio; and prevailing market and economic conditions (e.g. higher fuel prices, implementation of the E-VAT law) that may affect consumer purchasing power in the short to medium-term, affecting the capability of PSBank’s market to meet payments on its existing obligations or to take on additional loans.
As the retail banking subsidiary of Metrobank, the bank’s focus is on retail deposit-taking and consumer lending to the upper and middle-income classes.
With assets of P52.6 billion as of June 2005, PSBank is the second largest among the 90 thrift banks in the country. The bank accounts for about 16 percent of the thrift banking sector’s total assets, about 16 percent of total loans, 19 percent of total deposits, and 11 percent of total capital.
PSBank currently has 150 branches, with about 93 branches located in the National Capital Region.
Philratings said PSBank’s asset quality profile is adequate, considering the bank’s level of bad loans, the amount of loss reserves on non-performing loans (NPLs), and the diversification of its loan book.
"PSBank’s funding profile is supported by very healthy deposit generation. Deposit volumes have increased steadily in the past five years, surging by 45 percent in 2004. About 65 percent of total deposits amounting to P40 billion as of end-2004, consisted of low-cost savings and demand deposits," Philratings said.
PSBank showed significant improvement in its ratio of non-performing assets (NPAs) to total loans, with the ratio at 12.63 percent as of September 2005 compared to 2002’s 19 percent. As of June 2005, the thrift bank sector average was at 22.6 percent.
In the nine months ending September 2005, PSBank posted a net income of P429 million. — Zinnia dela Peña