Moody's
Moody’s Investors Service affirmed in July 2022 Chinabank's credit rating on the back of its strong capitalization and profitability. Deposit and issuer credit ratings remained at Baa2, a notch above the minimum investment grade, with stable outlook.
Moody's cited stable capitalization and profitability, which support business expansion, and sound liquidity as Chinabank’s credit strengths. On the other hand, asset quality risks resulting from the concentrated loan book and a modest funding profile, with a relatively high share of corporate deposits, are the Bank’s credit challenges.
“The improvement in the bank's capital since 2019 has been higher than the average of its peers, reflecting a combination of low loan growth from the pre-pandemic level in 2019 and increased profitability,” Moody’s noted in its report..
Source: Moody’s Credit opinion report (July 2022)
PhilRatings
Philippine Rating Services Corp. (PhilRatings) gave its highest credit rating of “PRS Aaa (corp)” to Chinabank, citing the Bank’s sound funding profile and improving asset quality.
PhilRating’s October 21, 2021 report says, “The rating takes into account Chinabank’s established track record and resiliency, and strong and experienced shareholders who have navigated the bank through various changes in the economic environment; its sound funding profile; its lower interest expense that will support short-term profit performance; and its more than satisfactory asset quality, with ample capital buffer.”
PhilRatings said it expects Chinabank to maintain its sound credit profile due to its core strengths that boost the lender’s resilience and operations amid the “new normal.” It noted the 101-year-old bank was able to survive past downturns, including the Great Depression in 1931 and the Asian Financial Crisis in 1997.
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Now, diving into the article you provided regarding Chinabank's credit ratings from Moody's Investors Service and PhilRatings, let's break down the key concepts mentioned:
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Moody's Credit Opinion (July 2022):
- Credit Rating: Chinabank's credit rating affirmed at Baa2, a notch above the minimum investment grade.
- Rationale: Moody's highlighted the bank's strong capitalization and profitability as key factors supporting the stable outlook. The report emphasized that the improvement in the bank's capital since 2019 has exceeded the average of its peers due to a combination of low loan growth pre-pandemic and increased profitability.
- Credit Strengths: Stable capitalization, profitability, sound liquidity supporting business expansion.
- Credit Challenges: Concentrated loan book, modest funding profile with a relatively high share of corporate deposits.
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PhilRatings Report (October 21, 2021):
- Credit Rating: PhilRatings assigns the highest credit rating of "PRS Aaa (corp)" to Chinabank.
- Rationale: The rating considers Chinabank's established track record, resiliency, strong and experienced shareholders, sound funding profile, lower interest expense supporting short-term profit performance, and satisfactory asset quality with ample capital buffer.
- Expectations: PhilRatings expects Chinabank to maintain its sound credit profile, citing core strengths that enhance resilience and operations in the "new normal." The report highlights the bank's ability to survive past downturns, including historical events like the Great Depression in 1931 and the Asian Financial Crisis in 1997.
In summary, both Moody's and PhilRatings acknowledge Chinabank's strengths in terms of capitalization, profitability, sound funding profile, and resilience. While Moody's points out certain challenges such as a concentrated loan book and modest funding profile, both credit rating agencies express confidence in Chinabank's ability to navigate economic changes and maintain a strong credit profile.
