Fitch Ratings revises the outlook for PH banks to “negative”
Metro Manila (CNN Philippines, July 20) – Fitch Ratings revised its outlook for major Philippine banks after lowering its outlook for the country to “negative”.
In a statement released this week, the Global Debt Monitor said he had changed his outlook on Land Bank of the Philippines long-term issuer default (IDR) ratings from “stable” to “negative”. , Bank of the Philippine Islands (BPI), Philippine National Bank (PNB), Development Bank of the Philippines (DBP), BDO Unibank and Metrobank.
As recently as last week, Fitch lowered his outlook for the Philippine economy to “negative” from the previous “stable”.
However, Fitch maintained its “BBB” IDRs for Land Bank and DBP; “BBB-” for BPI, BDO and Metrobank; and “BB” for PNB.
These scores are far removed from the level A scores targeted by the government.
The credit rating agency noted that the national economy has slowly recovered from its initial expectations, particularly with a further decline in economic output of 4.2% in the first quarter of 2021.
“Business confidence and private consumption remain sluggish and pose persistent challenges to the quality of banking system assets,” said Fitch Ratings.
The international credit assessor expects the country’s gross domestic production to increase by 5% in 2021, still below the government’s reduced target range of 6-7% for the year.
“The less vigorous economic recovery is likely to weigh on loan demand and business opportunities over the next 12-18 months,” Fitch Ratings said, adding that it has also revised banks’ operating environment score. to “bb +” / negative “from” bb + “/ stable.”
This score acts as a “constraining factor” on the viability rating of the banking institution, he added.
Fitch defines “bb” ratings as indicating a “moderate” outlook for a bank’s current viability.
“There is a moderate degree of fundamental financial strength, which should be eroded before the bank has to rely on extraordinary support to avoid default,” he said.
“However, there is a high vulnerability to adverse changes in business or economic conditions over time,” added Fitch.