MOODY’S RATINGS has affirmed the long- and short-term ratings of three Philippine banks, it said late on Monday.

The debt watcher affirmed the “Baa2/P-2” long and short-term issuer and deposit ratings of China Banking Corp., (Chinabank), Philippine National Bank (PNB), and Security Bank Corp.

It also kept its “stable” ratings outlooks for Chinabank and PNB and revised that for Security Bank to “stable” from “negative.”

“We revised the outlook on Security Bank’s deposit, issuer and senior unsecured ratings to stable from negative, as the negative pressure on the bank’s capitalization has abated amid much slower credit growth,” the credit rater said.

Moody’s Ratings sees the lender’s capitalization, measured by common equity as a percentage of risk-weighted assets, to improve over the next 12 to 18 months following its purchase of a 25% stake in Home Credit Philippines and amid expectations of moderate loan growth.

Meanwhile, it expects PNB’s capitalization to decrease modestly over the next 12 to 18 months as loan growth exceeds internal capital generation, while Chinabank’s capital will remain stable.

Meanwhile, Moody’s Ratings expects Chinabank and Security Bank’s asset quality to weaken until 2027, due to continued loan seasoning pressures, the residual impact of the flood control probe, and higher cost of living, which could weigh on the repayment capacity of retail borrowers.

For its part, the debt watcher said PNB’s asset quality could face risks in the event of a prolonged Middle East conflict due to its exposure to sectors heavily affected by the crisis.

In terms of profitability, Moody’s Ratings sees PNB’s return on assets remaining broadly stable this year as its margins will be supported by effecting funding cost management and retail loan growth despite an expected modest increase in credit costs.

Security Bank and Chinabank’s own return on assets, meanwhile, are expected to moderate over the next 12 to 18 months on modest loan growth and elevated credit costs.

Chinabank’s net interest margins are expected to expand over the next 12 to 18 months, supported by faster consumer loan growth and project financing, but this may be offset by higher credit costs and weakening asset quality.

On the funding side, Moody’s Ratings said Security Bank’s deposit growth will remain stable supported by the bank’s extensive usage of structured deposits which are more rate sensitive.

The credit watcher noted that both Security Bank and PNB have strong liquidity, with Security Bank having enough to meet its short-term funding gap and PNB having the highest current and savings account ratio at 75% as of 2025 in the industry.

However, it said Chinabank’s modest funding and liquidity constrain its credit profile. — A.M.C. Sy

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