PSBank obtains top issuer rating

Philippine Savings Bank, the thrift bank of the Metrobank Group, was assigned the highest issuer rating of PRS Aaa Corp. By Philippine Rating Services Corp.

A company rated PRS Aaa has a very strong capacity to meet its financial commitments relative to that of other Philippine corporates.

PsBank is the country’s second largest thrift bank with 255 branches and 626 automated teller machines as of the end of April this year. Its assets stood at P173.9 billion as of the end of the first quarter.

An issuer rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations within a time horizon of one year.

In assigning the rating, Philratings considered PSBank’s well-defined growth strategy, positive revenue growth, expectations that the lender’s funding profile will continue to improve and the favorable outlook for domestic consumer credit.

PSBank is a strong player in the consumer credit market, which accounts for 80 percent of its loan portfolio.

“The bank has been following a more stable growth strategy, following years of aggressive expansion aimed at strengthening market recognition of the PSBank brand. The consumers, however, will remain as the bank’s target market, and will continue to dictate the bank’s strategy going forward, “PhilRatings said.

“While the addition of brick- and- mortar branches will continue to support PSBank’s expanding market reach, information technology is seen to play an increasing role in the bank’s competitive strategy, as part of efforts to provide a better response against other players to its customers’ evolving needs and wants,” the local credit watchdog said.

Interest income, a more stable and recurring revenue source, continued to post increases in 2014 and 2015, as well as in the first quarter of the year, driven by the expansion of the bank’s loan portfolio.

The increases helped counterbalance the impact of more volatile non-interest revenues (particularly, trading gains) on PSBank’s topline.

While forecasts show a recovery in non-interest income, core interest income will continue to account for more than 70 percent of revenues, as the bank builds up its loan portfolio in response to continued demand in consumer credit.

Philratings noted that PSBank’s current and savings accounts grew 28.8 percent from 2014 to March 2016. “These developments are seen to enhance PSBank’s funding profile, as CASA is viewed as more stable and less expensive than time deposits,” Philratings said.