PHILIPPINE Business Bank (PBB) bagged a high corporate rating from a Manila-based debt watcher on the back of the bank’s core business expansion and asset quality.
The Yao-led lender secured a PRS Aa minus (corp.) rating from the Philippine Rating Services Corp. (PhilRatings), a notch below the highest corporate credit grade on the firm’s scale. This means that the bank has a “strong” capacity to meet its financial commitments compared with other Philippine corporates.
“The ‘minus’ is included to further quality the rating,” the credit rater said in a statement on Tuesday.
The issuer rating for PBB takes into account the bank’s expanding core lending business supportive of revenue growth, above satisfactory asset quality, as well as a funding portfolio leaning towards high-cost deposits.
The bank’s net interest income has consistently posted growth from 2013-2017, accounting for the bulk of total revenues, PhilRatings said.
The growth in PBB’s interest income on loans and receivables, which rose 33.4% to P3.7 billion in 2017 from a year ago, is expected to continue going forward.
“Revenues are forecast to grow much faster than historical performance, as combined increases in loan volume and rates lead to interest earnings growth,” PhilRatings said.
Meanwhile, asset quality remains “more than satisfactory,” with non-performing loans maintained below three percent and investment properties continued its decline since 2015 due to disposals.
Meanwhile, credit to individual borrowers was unconcentrated as the top 10 creditors are only equivalent to 20.1% of total loans as of end-June 2018.
Deposits have consistently expanded within the five-year period ending 2017, although time deposits comprised the bulk of PBB’s deposit liabilities, PhilRatings said.
PhilRatings noted that small and medium enterprises are the thrift bank’s target market, as it comprises nearly all of the total business establishments in the country.
However, the domestic debt watcher said small businesses in the country face “a host of growth challenges” such as the lack of access to finance as well as high collateral requirements.
PBB shares closed unchanged at P12.50 apiece on Tuesday. — KANV

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