Fitch acts on Philippine banks

Fitch Ratings said it upgraded the long-term issuer default ratings of government-owned Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP) to BBB- from BB+.

The outlooks are stable. This follows the Dec. 10 upgrade of the Philippine sovereign's ratings, including its long-term issuer default rating to BBB from BBB-.

Concurrently, the agency revised upwards the support rating floors (SRFs) of DBP, LBP and the following privately owned Philippine banks: Bank of the Philippine Islands; BDO Unibank, Inc.; Metropolitan Bank & Trust Co.; China Banking Corp.; Rizal Commercial Banking Corp.; and Philippine National Bank.

Fitch said the upgrades of the issuer default ratings on DBP and LBP are driven by the upward revisions of their support rating floors.

“The SRF revisions stem from Fitch's expectation of an improving sovereign fiscal profile, which was one of the factors underpinning the upgrade of the sovereign ratings,” the agency said in a news release.

“This strengthening sovereign profile should enhance the state's ability to provide extraordinary support to the banks, if needed.

“The two banks' Support Ratings (SRs) have also been upgraded to 2 from 3 for the same reason.”

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