(The following statement was released by the rating agency)
Fitch Ratings-Singapore-February 20:
Fitch Ratings has revised the Outlook of two Philippine state-owned banks, Land
Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP), to
Positive from Stable. At the same time, the agency has affirmed the Long-Term
Issuer Default Ratings (IDR) of the banks at 'BBB'. The two banks' Viability
Ratings were not part of this review.
The revision of the Outlooks follows Fitch's Outlook revision on the Philippine
sovereign (BBB) to Positive from Stable on 11 February 2020. For more details,
see "Fitch Revises Philippines' Outlook to Positive; Affirms at 'BBB'" at
www.fitchratings.com. The Outlook revision on the sovereign rating reflects
continued adherence to a sound macroeconomic policy framework, progress on
fiscal reforms that should keep government debt within manageable levels and
continued resilience in its external finances.
The ratings of the privately owned Philippine commercial banks are not affected
by this review. We will reassess their ratings if there is further evidence of
the sovereign's improved ability and propensity to support the banking system
more broadly.
Key Rating Drivers
IDRS, SUPPORT RATINGS (SR), SUPPORT RATING FLOORS (SRF)
The banks' IDRs are equalised with those of the sovereign, reflecting our
expectations of a high probability of extraordinary state support for the banks
in times of need. This also drives the banks' SRs of '2' and SRFs of 'BBB'. The
assessment takes into consideration the banks' unique policy roles, 100% state
ownership and systemic importance. LBP is also the largest recipient of
government deposits. The ratings also consider the state's ability to support
the banking system, reflected in the 'BBB' sovereign rating.
The Outlook revision on both banks' IDRs mirrors the Outlook on the Philippine
sovereign, and reflects Fitch's view of improving sovereign ability to provide
extraordinary support to the two government banks, if needed.
SENIOR DEBT RATINGS
The senior notes of DBP are rated the same as its Long-Term IDR. This is because
the notes constitute direct, unsubordinated and senior unsecured obligations of
the bank, and rank equally with all its other unsecured and unsubordinated
obligations.
RATING SENSITIVITIES
IDRS, SRS AND SRFS
Changes to the sovereign's ability to provide support - as indicated by the
sovereign rating - as well as the government's propensity to provide timely
extraordinary support would likely lead to corresponding changes to the ratings
on LBP and DBP.
SENIOR DEBT RATINGS - DBP
Any change in the IDR would affect the issue ratings.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit
relevance is a score of 3 - ESG issues are credit neutral or have only a minimal
credit impact on the entities, either due to their nature or the way in which
they are being managed by the entities.
LBP and DBP have an ESG Relevance Score of 4 for Governance Structure. This
reflects our review of a moderate risk of government influence that negatively
affects their standalone credit profiles, in light of their full state ownership
and state-appointed board.
For more information on our ESG Relevance Scores, visit www.fitchratings.com/esg
Land Bank of the Philippines; Long Term Issuer Default Rating; Affirmed; BBB;
RO:Pos
; Short Term Issuer Default Rating; Affirmed; F2
; Local Currency Long Term Issuer Default Rating; Affirmed; BBB; RO:Pos
; Support Rating; Affirmed; 2
; Support Rating Floor; Affirmed; BBB
Development Bank of the Philippines; Long Term Issuer Default Rating; Affirmed;
BBB; RO:Pos
; Short Term Issuer Default Rating; Affirmed; F2
; Local Currency Long Term Issuer Default Rating; Affirmed; BBB; RO:Pos
; Support Rating; Affirmed; 2
; Support Rating Floor; Affirmed; BBB
----senior unsecured; Long Term Rating; Affirmed; BBB
Contacts:
Primary Rating Analyst
Tania Gold,
Senior Director
+65 6796 7224
Fitch Ratings Singapore Pte Ltd.
One Raffles Quay #22-11, South Tower
Singapore 048583
Primary Rating Analyst
Tamma Febrian,
Associate Director
+65 6796 7237
Fitch Ratings Singapore Pte Ltd.
One Raffles Quay #22-11, South Tower
Singapore 048583
Secondary Rating Analyst
Tamma Febrian,
Associate Director
+65 6796 7237
Secondary Rating Analyst
Tania Gold,
Senior Director
+65 6796 7224
Committee Chairperson
Grace Wu,
Senior Director
+852 2263 9919
Media Relations: Leslie Tan, Singapore, Tel: +65 6796 7234, Email:
leslie.tan@thefitchgroup.com; Peter Hoflich, Singapore, Tel: +65 6796 7229,
Email: peter.hoflich@thefitchgroup.com.
Additional information is available on www.fitchratings.com
Applicable Criteria
Bank Rating Criteria (pub. 12 Oct 2018)
https://www.fitchratings.com/site/re/10044408
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/site/dodd-frank-disclosure/10111487
Solicitation Status
https://www.fitchratings.com/site/pr/10111487#solicitation
Endorsement Policy
https://www.fitchratings.com/regulatory
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