Investment-grade rating to boost BPI business

MANILA, Philippines - Bank of the Philippine Islands (BPI) said it expects to further grow its business after emerging as the only Philippine bank rated investment-grade by international rating agencies.

In a statement, BPI said Moody’s Investors Service recently raised its baseline credit assessment – or the evaluation of the issuer’s stand-alone financial strength, excluding extraordinary government support – from ba1 to baa3.

“Moreover, it upgraded the deposit rating of BPI to Baa3/Prime-3 from Ba1/Not Prime, with a positive outlook in line with the positive outlook of Philippine government’s bond rating,” BPI said.

“Overall, Moody’s views the credit profile of BPI ... to be among the most defensive and best positioned to withstand a cyclical downturn among Moody’s-rated banks in the Philippines,” it added.

Earlier this year, Fitch Ratings raised BPI’s LTFC IDR, or long-term foreign currency issuer default rating, to investment grade BBB- from BB+. BBB ratings indicate good credit quality, with low expectation of default risk.

The LTFC IDR upgrade is in line with the banks LTLC (long-term local currency) IDR rating of BBB-. The outlook on the IDR is stable.

“BPI’s LTFC IDR had been until now constrained by the sovereign’s LTFC IDR of BB+, due to the bank’s exposure to the financial health of the government, wider domestic economy and local financial markets,” Fitch said.

“Of the major Philippine banks rated by Fitch, BPI’s ratings have been the highest, due to its established domestic presence, sound financial metrics and prudent management,” Fitch added.

BPI lead economist Emilio S. Neri Jr. said they are hoping the bank would also benefit from the investment grade given to the Philippines by these rating agencies.

“In view of the investment-grade rating received by the Philippines from the three major rating agencies – Moody’s in October, Standard & Poor’s in May, and Fitch in March – the country will be “top-of-mind among investors and fund managers who are keen on having a stake in the emerging markets’ growth,” Neri said.

“BPI being one of the country’s top-rated banks will surely benefit from this development,” he added.