Moody’s Upgrades Credit Rating of PNB
Moody’s Investors Service has upgraded the rating of Philippine National Bank (PNB) to investment grade, reflecting the consistent improvement in the Bank’s credit profile. PNB’s long-term and short-term ratings were raised two levels up from Ba2/NP to Baa3/P-3. Likewise, the ratings agency raised PNB’s baseline credit assessment (BCA) and Adjusted BCA to ba1 from ba3. The ratings upgrade serves as validation of PNB’s efforts at fortifying its business. This recognizes PNB’s drive toward its long-term corporate goals of high profitability supported by a strong balance sheet.
“The upgrade of the Bank’s BCAs and Adjusted BCA reflect improvements in asset quality profiles during a period in which new non-performing loans (NPL) formation has remained low in the Philippines,” Moody’s explained.
PNB improved its asset quality as non-performing loans (NPL) decreased to Php 9.9 billion at the end of 2014. The Bank’s non-performing loan ratio (net of valuation reserves), based on BSP guidelines, declined to 0.92% from 1.39% in the prior year. Similarly, the non-performing assets were cut with the sale of Php 2.2 billion in foreclosed properties.
“In addition, the Bank’s capital buffers have improved, following PNB’s Php 11.6 billion in new equity raising in early 2014,” Moody’s added.
Last February 2014, PNB successfully raised Php 11.6 billion in fresh capital from a stock rights offering which strengthened the Bank’s capital position under the Basel III standards. The fund-raising exercise was oversubscribed, reflecting the investors’ strong confidence in PNB’s long-term growth prospects. By end 2014, the Bank’s consolidated capital position remained strong with a Capital Adequacy Ratio (CAR) of 20.6% and a CET 1 ratio of 17.4%, exceeding the minimum 10% and 8.5% required by the BSP, respectively.
“Its high levels of capitalization and loan-loss coverage provide sufficient loss absorption capacity at its current rating levels to withstand systematic stresses over the next 12 to 18 months,” the ratings agency said.
As of December 31, 2014, PNB is the fourth largest private bank in the country with consolidated assets reaching Php 625.4 billion. PNB posted a net income of Php 5.5 billion in 2014, 5% higher than the previous year’s Php 5.2 billion. To date, PNB has a total of 660 domestic branches and 74 overseas branches and offices.