AYALA-LED Bank of the Philippine Islands (BPI) secured on Tuesday a “BBB+” long-term and “A-2” short-term issuer credit ratings (ICR) with a stable outlook from S&P Global Ratings.

“This is the first credit rating assigned by S&P to the bank, of which the ‘BBB+’ ICR is at par with the Philippine sovereign rating of ‘BBB+,’” the lender said in a disclosure on Tuesday.

“The stable outlook on BPI reflects our view that the bank will maintain its dominant market position and strong capital buffers over the next two years,” the S&P said in its research update dated Aug. 26.

“The ratings reflect BPI’s dominant market position as the third-largest bank in the Philippines, its good competitive position, and its strong capitalization. We expect the bank’s risk adjusted capital (RAC) ratio to be 10%-11% over the next two years, underpinned by high profit retention and moderation in loan growth,” the credit rater said.

“In addition, we anticipate that BPI’s asset quality will continue to be sound, underscoring the bank’s good underwriting practices and risk control. However, a minor deterioration in asset quality is likely as the bank grows its higher-yielding, but riskier, consumer and small and midsize enterprise portfolio,” it added.

S&P said BPI’s funding profile is supported by its branch network and record of “strong depositor confidence.” It gave BPI’s stand-alone credit profile (SACP) a grade of “bbb+.”

BPI said in a statement to the local bourse that it is the first private domestic bank in the Philippines to achieve investment-grade ratings of bbb+/BBB+ in both SACP and ICR.

According to the bank, the entire ratings process took about three months — from May to August — in coordination with the bank’s ratings advisor consultant, Mizuho Bank Ltd.

BPI booked an attributable net income in the first half of the year at P13.74 billion, an increase of 24.6% from P11.03 billion during the first semester of 2018.

In the second quarter of the year, its total capital adequacy ratio stood at 16.44%, while its Tier 1 and common equity Tier 1 ratios were both at 15.55% on a consolidated basis.

Shares in BPI went down P2.80 or 3.11% on Tuesday to P87.10 apiece from its Aug. 23 close of P89.90 each. — Mark T. Amoguis

RELATED ARTICLESMORE FROM AUTHOR