PhilRatings upgrades Bancommerce ratings

MANILA, Philippines - Domestic credit watcher Philippine Rating Services Corp. (PhilRatings) has upgraded the issue and issuer credit ratings of Bank of Commerce due to the bank’s improving capital position and the acquisition by San Miguel Corp. (SMC) of a controlling stake.

From a PRS A plus, the rating for Bancommerce’s outstanding P1.5 billion unsecured subordinated debt moved a notch higher at PRS Aa minus. An institution rated PRS Aa differs from the highest rated corporate only to a small degree and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates. A plus or minus sign is added to further qualify the ratings.

Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is very strong, PhilRatings said.

It pointed out that San Miguel’s acquisition of a controlling interest augurs well for the bank given the diversifying conglomerate’s strength, flexibility and diversity.

“The SMC Group’s majority ownership has strengthened Bancommerce’s competitive position given the opportunity of servicing dominant and leading domestic companies which belong to the SMC Group (e.g. San Miguel Brewery, Petron). The entry of SMC has also led to the expansion in Bancommerce’s business as the bank has been able to provide its products and services to the companies, as well as the suppliers/dealers/distributors of the companies within the SMC Group,” PhilRatings said.

PhilRatings added that the controlling interest of SMC in the bank provides Bancommerce a greater opportunity to further expand its volume of business. This will result from the major projects being undertaken by Bancommerce to generate additional revenue and funding streams from partners and consumers of the companies within the SMC Group. – Zinnia Dela Peña