THE PLANNED merger between Bank of the Philippine Islands (BPI) and BPI Family Savings Bank (BFSB) will boost efficiencies and have little impact on the parent bank’s credit profile, S&P Global Ratings said.

“The integration will increase BPI’s operational efficiency by eliminating duplication of the physical network. The surge in popularity of mobile and internet banking due to COVID-19 has enhanced focus on having a robust digital infrastructure and rationalize the branch network,” S&P analysts Ivan Tan and Nikita Anand said in a report on Tuesday.

The merger will have “minimal impact” on BPI’s credit rating, which currently stands at BBB+ with a negative outlook, the analysts said. They noted BPI’s rating is already based on a consolidated level, with BFSB contributing 13% to 15% to the parent bank’s overall assets and profits.

BPI last week announced its plan to absorb its thrift unit, saying they hope to finalize the transaction within the year. It said the merger will put under one bank the two lenders’ 8.5 million customers.

It said the reduction in the gap in the regulatory reserve requirements between commercial banks and thrift banks was also a factor for the move. The reserve requirement ratio for big and thrift banks currently stand at 12% and three percent, respectively.

S&P said they do not see other big banks following BPI’s move to consolidate with its thrift arm.

“The 600-basis-point gap in RRR ratio is still significant for major banks to benefit from having a separate thrift bank subsidiary. Banks will likely continue to take advantage of lower regulatory costs at thrift bank subsidiaries and house riskier loans with them,” it said.

BFSB is the country’s largest thrift bank with P287 billion in assets, P235 billion in deposits and P227 billion in loans.

Meanwhile, its parent bank BPI’s net income declined 33.7% to P5.5 billion in the third quarter of 2020. This brought its net profit for the first nine months to P17.17 billion, down 22.1% from the P22.03 billion booked in the comparable 2019 period.

BPI’s shares slipped by 25 centavos or 0.3% to close at P82.95 apiece on Tuesday. — L.W.T. Noble