MOODY’S INVESTORS Service said the P50-billion stock rights offering (SRO) to be conducted by the Bank of the Philippine Islands (BPI) is credit positive as this will bolster the lender’s capital buffers.

“Based on our estimates, the rights issuance would add about 380 basis points to the bank’s common equity Tier 1 (CET1) ratio of 11.8% as of December 2017,” Moody’s said in its credit outlook published March 22.

This improvement, the debt watcher said, would bring BPI’s CET1 ratio well above the capital of other Philippine banks, as well as the 10% minimum requirement of the Bangko Sentral ng Pilipinas.

Moody’s said the rights issue will support BPI’s credit growth while strengthening its capital buffers against risks, adding that the capital raising activity will be efficient to support credit growth of about 20% over the next three years ending 2020.

“Thereafter, the bank’s CET1 ratio will decline to 12%-13% as the growth of risk-weighted assets outpaces the growth of retained earnings,” the credit rater said, adding that this may leave the bank in need of new capital because its internal capital generation capacity lags its credit growth.

On March 16, BPI said in a disclosure that it obtained approval of the Philippine Stock Exchange to conduct an SRO that would raise up to P50 billion, which will fund the lender’s business expansion.

The pricing for the issue will be announced today, while the offering will be conducted from April 26 to 25.

Aside from BPI, Metropolitan Bank & Trust Co. and Rizal Commercial Banking Corp. have also announced plans to conduct SROs expected to raise fresh capital worth P60 billion and P15 billion, respectively.

Last year, BPI booked a net income of P22.42 billion, up by 1.7% from the same period in 2016.

Shares in the Ayala-led bank closed at P109.30 apiece on Monday, up two centavos or 0.18%. — Karl Angelo N. Vidal

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