PhilRatings gives top grade to China Bank

CHINA BANKING Corp. (China Bank) bagged the highest credit score from Philippine Rating Services Corp. (PhilRatings), with the lender seen keeping its solid footing amid expansion plans.

In a statement, PhilRatings said the Sy-owned universal bank secured the “PRS Aaa (corp.)” rating, which is the top tier in the local debt watcher’s scale.

“The rating takes into account China Bank’s growth strategy, which supports expansion in scale, market reach, and product base, while keeping its solid franchise on its core market; synergies with its strong shareholder and experienced management; sound asset quality; improvement in funding profile; and the favorable outlook of the domestic banking industry,” PhilRatings said on Monday.

A firm with an “Aaa” rating is said to have a “very strong” capacity to meet its financial commitments when compared to other Philippine corporates.

China Bank is the seventh-biggest bank in the country as of September 2018, according to central bank data. Bank assets reached P727.706 billion, while total loans amounted to P417.581 billion during the period.

“China Bank’s brand franchise continues to expand, supported by its acquisitions in recent years that reflect its goal to grow further in scale, market reach, and product base,” the credit rater added, noting that the bank’s foothold on the Filipino-Chinese commercial segment has helped propel the bank over the past 98 years.

In particular, PhilRatings said the lender’s acquisition of its thrift unit China Bank Savings, Inc., as well as its investment banking arm China Bank Capital Corp., has helped broaden its services to cover big-ticket financing for corporate clients.

Asset quality also remains “sound,” with China Bank holding on to a low share of bad debts at just 1.4% as of end-2017.

“Ample risk mitigation measures vis-a-vis credit expansion will keep asset quality stable,” PhilRatings noted, while pointing out that bank loans remain supported by customer deposits.

Current and savings accounts also account for more than half of the bank’s deposit base, which is deemed “credit positive” as these are a more stable funding source.

The Makati-based debt watcher also pointed out that being part of the SM Group conglomerate allows China Bank to have special access to certain markets.

Shares in China Bank closed at P27.75 each on Monday, down 20 centavos or 0.72% from the previous day’s finish.