Universal lender China Bank gets top rating from the Philippine Rating Services Corp. or Philratings. Its PRS Aaa rating is a nod in its strong shareholder and management, sound asset quality, improving funding profile and favorable outlook. CONTRIBUTED PHOTO

Sixth largest lender China Banking Corporation (China Bank) on Tuesday announced that it was given by credit rating agency Philippine Rating Services Corporation (PhilRatings) top rating on its credibility scale.

In a PhilRatings news release filed by China Bank to the stock exchange, the agency said the PRS Aaa (corp.) issuer rating indicates that a company has a “very strong capacity to meet its financial commitments relative to that of other Philippine corporates.”

PhilRatings said the rating is based on information at hand during the period of evaluation and is subject to monitoring and may change should circumstances warrant a change.

An issuer rating stems from the evaluation of the issuer’s ability to meet financial obligations within the timeline of a year, PhilRatings added, with a focus on the company’s capability to overcome existing and prospective financial obligations under normal or stressed conditions.

PRS Aaa (corp.) is the highest corporate credit rating on the PRS scale.

PhilRatings said it took into account factors such as China Bank’s growth strategy including its expansion in scale, market reach and product base while maintaining solid franchise on its core market.

The agency also considered the bank’s synergies with its strong shareholder and experienced management; sound asset quality; improvement in funding profile and the favorable outlook of the local banking industry.

Meanwhile, PhilRatings said that the rating is based on information at hand during the period of evaluation and is subject to monitoring and may change “should circumstances warrant a change.”

China Bank ramped up its expansion program since its inception in the Philippine market 98 years ago. Currently, the Sy-led SM Group has a 38.8-percent stake on the bank, of which SM Investments Corporation owned 19.9 percent of as of end-2017.

PhilRatings considers China Bank’s asset quality as sound owing to a favorable portfolio expansion combination and declining non-performing loans (NPL), with gross NPL ratio decelerating as low as 1.4 percent in the last two years.

The lender’s deposits-to-liabilities ratio ranged from 93.9 percent to 96.3 percent from 2013 to 2017, while the share of current and savings account (CASA) to deposits went up to 54 percent by end-2017, allowing PhilRatings to view China Bank as credit positive.

China Bank’s CASA went up by 24.1 percent to P343 billion in 2017 owing to branch expansion and customer acquisition efforts, the agency said. It projects CASA to be comprised mostly of deposits for the period 2019 and 2020.