Moody’s updates ratings of 3 financial institutions

INTERNATIONAL credit observer Moody’s Investor Service confirmed ratings of two local banks and downgraded one bank’s rating over the weekend.

In separate statements, Moody’s has confirmed the long-term deposit ratings of China Banking Corp. and Security Bank Corp. However, he downgraded the long-term deposit rating of Rizal Commercial Banking Corp. (RCBC).

For Chinabank and Security Bank, the international credit monitor said the two banks had relatively stable metrics amid the pandemic.

Security Bank, in particular, was selected at Baa2 because it was felt to have a strong, above-average capital position that offsets its high asset risks and average profitability.

Moody’s also noted Security Bank’s modest funding structure, reflecting its moderate deposit franchise as a mid-sized bank in the Philippines and adequate liquidity.

The international credit observer said that an upgrade is unlikely for Security Bank, a downgrade is possible if the quality of its assets deteriorates, its capital buffer declines significantly, or its core profitability falls below. a certain threshold.

For Chinabank, Moody’s retained the bank’s Baa2 ratings, noting the improvement in its capital and profitability, which mitigates risks to asset quality.

Moody’s also said Chinabank’s capital will remain stable over the next 12-18 months, with upside potential, as balance sheet growth will be moderate.

However, the rating agency downgraded RCBC’s rating from Baa2 to Baa3.

“The downgrade is due to low asset quality and capital deterioration,” Moody’s said.

“The bank’s loan growth has been significantly higher than that of the system, with lending growth of 13% year-on-year at the end of September 2021, compared to 3% for the system. This poses downside risks to asset quality, ”Moody’s said.

“Strong loan growth has also had an impact on capital, with Common Equity Tier-1 at end-September 2021 falling to 12.1% from 12.6% at end-2020. Capital will continue to decline, as Moody’s expects that the bank maintains strong loan growth, ”he added.

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Marianne R. Winn