MANILA, (PNA) — Leading banks in the country are expected to benefit from the Philippines’ investment grade status, the lead economist of the Ayala-led Bank of the Philippine Island (BPI) has said.
BPI lead economist Emilio S. Neri Jr., in a statement on Tuesday, said the domestic economy “will be top-of-the-mind among investors and fund managers who are keen on having a stake in the emerging markets’ growth.”
The Philippines now enjoys investment grade status from the three major debt watchers — Fitch Ratings, Standard & Poor’s (S&P), and Moody’s Investors Service.
Fitch upgraded the country to investment grade last March, S&P last May and Moody’s last October.
This was driven by the continued improvement of the country’s external payments position, strength of the banking system, sustained expansion of the domestic economy and positive developments on the government’s fiscal position.
BPI is the lone bank in the country that holds an investment grade rating from two credit rating agencies.
Last Oct. 3, Moody’s raised its rating on BPI’s baseline credit assessment to investment grade at baaa3 and raised to baaa3/Prime-3 with positive outlook the bank’s deposit rating.
Last April, Fitch upgraded the bank’s long-term foreign currency issuer default rating (IDR) to investment grade, BBB-, after noting the bank’s capacity for payment of financial commitments is considered adequate.
“BPI, being one of the country’s top-rated banks, will surely benefit from this development,” Neri added.
The Bangko Sentral ng Pilipinas (BSP) on Monday reported that the country’s financial system remains strong at the end of the first half of 2013.
For one, domestic banks’ total resources, which account for 80 percent of the Philippines’ financial system, expanded by 16.2 percent year-on-year to P8.6 trillion.
This was driven by the 12.3 percent year-on-year rise in loans, which in turn was partly boosted by the 18.3 percent rise in deposits.
The BSP said banks’ net profits as of end-June this year registered a 60 percent year-on-year expansion.
Similarly, domestic banks’ asset quality continues to remain strong since amidst the rise in loans, gross non-performing loans (NPLs) continue to be low and accounts to only about 3.3 percent of the industry’s total loan portfolio (TLP).
The industry’s capital adequacy ratio (CAR), a gauge of banks’ financial health, remains above the 10 percent requirement of the BSP with the solo basis at 18 percent and the consolidated basis at 19.3 percent.
At the end of the first half this year, there are about 683 domestic banks in the Philippines with 8,860 branches, 13,129 automated teller machines (ATMs), 391 microfinance banking offices, and 212 banks with e-banking services.