‘We expect further weakening in the bank’s asset quality as its loan season, and as a consequence of its target to double-digit growth in higher risk segments such as its credit cards, personal and business bank (small and medium-sized enterprises) loans.’
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Moody’s Ratings projects that three key banks in the country will remain stable and continue to issue investment-grade bonds in the near term, thanks to their substantial capital sources.
BDO Unibank Inc., Bank of the Philippine Islands (BPI) and Metrobank all received (P)Baa2 ratings for their foreign currency senior unsecured medium-term note programs.
While Moody’s affirmed a stable outlook for BPI, the global credit rater cautioned the bank against excessive growth in unsecured debts, including credit card loans and microfinance.
Moody’s reported that BPI’s non-performing loan ratio increased to 2.3 percent as of March 2025, higher than the 2.1 percent recorded for the full year of 2024 and the 1.8 percent in 2023.
“We expect further weakening in the bank’s asset quality as its loan season, and as a consequence of its target to double-digit growth in higher risk segments such as its credit cards, personal and business bank (small and medium-sized enterprises) loans.”
Moody’s said BPI’s return on assets might settle within 1.6 to 1.7 percent in the remaining quarters of the year.
9% profit growth
In a report to the stock exchange, BPI bared its profit grew by 9 percent in the first quarter to P16.6 billion, compared to the same period in 2024.
This was after the bank attracted 5 million more clients, boosting gross loans by 13.2 percent year-over-year to P2.3 trillion.
However, Moody’s said BPI will continue to maintain a strong capitalization, with a common equity tier 1 ratio of 13.5 to 14 percent.
“This is even as loan growth accelerates, given strong expected internal capital generation and a 30 to 40 percent dividend payout,” Moody’s said.
For Metrobank, Moody’s said the lender might sustain its non-performing loans ratio of 1.6 percent for the rest of the year as it focuses on corporate clients
“While the asset quality of retail loans will remain weaker than non-retail loans, We expect the NPL ratio of the bank to remain broadly stable, as non-retail loans continue to account for a sizable proportion of the loan book and will remain the key driver of asset quality over the next 12 to 18 months,” Moody’s said.
Lastly, Moody’s stated that BDO continues to grow consumer loans and reduce risks through its extensive base of depositors and focus on profitable corporate clients.
The global credit rating said the bank had already grown its compounded annual growth rate of consumer loans by 14.5 percent from 2022 to 2024.
“We expect the bank’s funding and liquidity to remain its key strengths, with a robust and growing dominant franchise supporting its deposit market share, which was the highest among its domestic rated peers as of end-2024,” Moody’s said.
Moody’s expects BDO to sustain profitability through return on assets at 1.6 to 1.7 percent in the remaining quarters of the year.
BDO president and chief executive officer Nestor Tan said that loans could remain robust this year, mainly due to business loans, while borrowings from individual clients remain steady.
“We put on hold capital expenditures during the pandemic and we have not seen them normalizing because after the pandemic, we had the Russia-Ukraine crisis, which affected commodity prices and interest rates,” he said at the bank’s annual stockholders’ meeting in April.
