DBP gets stable ratings

Fitch Ratings has affirmed the Development Bank of the Philippines’ (DBP) ratings, and gave it a ‘stable’ outlook.

Likewise, Fitch gave the government financial institution a long-term foreign currency Issuer Default Rating (IDR) at ‘BB’, Long-term local currency IDR at ‘BB+’, National Long-term Rating at ‘AA+(phl)’, Individual Rating at ‘C/D’, Support Rating at ‘3’, Support Rating Floor at ‘BB-’ (BB minus) and its $130-million perpetual callable subordinated hybrid notes at ‘BB-’ (BB minus).

According to the international rating agency, DBP’s ratings are based on its strong balance sheet strength and adequate profitability for a policy bank.

“These factors should underpin the bank’s ability to negotiate the more difficult operating environment, even though its financial profile is likely to come under some pressure. In addition, downside risks to the bank’s ratings may also be mitigated by the high propensity of regulatory support in the unlikely event of need, although Fitch notes that the timeliness of support could be constrained by the government’s low ability, given its sovereign IDR of ‘BB’,” it added.

After its 2006 bulk sale, DBP’s asset quality indicators remained the healthiest among the Philippine banks.

The solvency position of the bank is still strong, considering that its non-performing loans (NPLs) and properties portfolio - after reserves - represented a low three percent of core equity.

“Notwithstanding good asset quality and satisfactory risk management capability, a high capital position is perceived to be necessary for DBP given its role as a development bank, resulting in its Tier 1 and total capital adequacy ratio (CAR) being 18 percent and 22 percent, respectively, at end-2007,” it said in a statement yesterday.

The core equity/assets ratio is equally solid at 10 percent.

Recently, DBP issued its tier 2 capital notes worth P7.65 billion with an 8.5 percent yield, which signaled a re-opening of its capital-raising efforts. — TPT