Robinsons Bank’s P5 B bond issue gets top rating

Robinsons Bank Corp.’s proposed bond issuance amounting to as much as P5 billion obtained an issuer credit rating of PRS Aa minus (corp.)

The offer has a base size of P2.5 billion, with an oversubscription option of P2.5 billion. It was also assigned a stable outlook, which means the rating is likely to be maintained or to remain unchanged in the next 12 months.

PRS Aa (Corp.) differs from the highest rated corporates only to a small degree, and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates. The minus further qualifies the issue rating.

Robinsons Bank is the financial services arm of taipan John Gokongwei’s JG Summit Holdings Inc. It was the 18th largest bank with assets of P120.7 billion based on data from Bangko Sentral ng Pilipinas (BSP) as of June 30.

The bank’s distribution network consisted of 149 branches and 310 ATMs. Its subsidiary, Legazpi Savings Bank, had 16 and 18 branches and ATMs, respectively as of Sept. 30.

The issuer credit rating takes into consideration Robinsons Bank’s support from strong shareholders, well-experienced management, more than satisfactory funding profile, its marginal but growing banking franchise and its modest profitability.

Retail funds accounted for a significant portion of Robinsons Bank’s funding base for 2014-2018. Current and savings accounts, which are considered more stable and low-cost deposits, represented the bulk of deposits, with a share of 76.1 percent as of June 30, 2019.

Robinsons Bank appears able to compete against its much bigger peers, given the gradual and consistent improvement in the bank’s industry ranking. Since it started operations in 1997, the bank has achieved growth through organic expansion, strategic acquisitions and mergers.

Relative to its peers, Robinsons Bank’s profitability is considered modest. Bottom line performance has been volatile for the last five years. While return on average assets has been stable, it remained below one percent, ranging from 0.3% to 0.4%.