BPI Family Savings Bank (BFSB), the consumer and retail banking arm of the Bank of the Philippine Islands (BPI), was assigned the highest issuer rating of PRS Aaa (corp.) with a stable outlook.
Philippine Rating Services Corporation (PhilRatings) said a company rated “PRS Aaa” has a very strong capacity to meet its financial commitments relative to that of other Philippine corporates while a stable outlook indicates that the rating is likely to be maintained in the next 12 months.
“The assigned issuer rating of BFSB considers the bank’s strong market position which is supported by its solid brand equity; highly-experienced Board and management; and sound capitalization,” the ratings agency said.
It noted that, “These strengths are seen to provide strong support to BFSB amid the challenges in relation to its profitability and asset quality given the impact of the ongoing pandemic.”
BFSB is the largest thrift bank in the country, based on resources and was the second-largest capitalized bank among domestic thrift banks.
Its large capital base is seen as providing the bank with a greater buffer, compared with lower-capitalized thrift banks, against losses that may affect the banking industry as a whole.
Going forward, PhilRatings said these strengths are seen to provide support to BFSB given the pandemic’s impact on the bank’s profitability and asset quality.
Based on estimated results, profitability significantly dropped in 2020, as the jump in provisioning took its toll on net income. The bank took into account the likelihood of higher loan delinquencies due to the pandemic.
Indicative of a diminution in asset quality facing the bank is the uptick in BFSB’s gross non-performing loans (NPL) ratio as of end-September 2020. Moving forward, BFSB expects NPL ratio to remain higher than historical, in the short-term period.
Last January, BPI announced that it will merge with BFSB, with BPI as the surviving entity.
PhilRatings believes its rating considerations for the issuer credit rating of BFSB continue to hold as of report writing date, based on available information on the merger.
The ratings firm said it will continue to closely monitor developments in relation to the merger, taking into account their significance in relation to BFSB’s credit profile.
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