PhilRatings gives China Bank triple A rating

Published October 21, 2021, 4:38 PM

by James A. Loyola

China Banking Corporation (China Bank) has received the highest issuer rating of PRS Aaa (corp.) with a Stable Outlook from Philippine Rating Services Corporation (PhilRatings).

One of the country’s leading private universal banks with a strong franchise in the Chinese-Filipino market China Bank was the country’s seventh-largest bank based on assets as of June this year.

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The Bank similarly ranked seventh based on deposits, and sixth based on loans. The bank had 636 branches and 1,038 ATMs, as of June 30, 2021.

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.

The focus is on financial strength and stability under normal and stressed conditions to be able to meet existing and prospective financial obligations.

A company rated PRS Aaa (corp.) has a very strong capacity to meet its financial commitments relative to that of other Philippine corporates. A Stable Outlook means the rating is likely to be maintained in the next 12 months.

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PhilRatings said the rating takes into account China Bank’s established track record and resiliency, and strong and experienced shareholders who have navigated the bank through various changes in the economic environment.

It also noted the bank’s 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.

China Bank’s core banking franchise is anchored mainly on its more than 100-year history in the Philippines. The bank has successfully managed to ride out various phases of the economic cycle, including the Great Depression in 1931 and the Asian Financial Crisis in 1997.

PhilRatings said China Bank is expected to keep its sound credit profile due to its core strengths. These strengths are seen to provide support to the Bank’s resiliency and continued operations amid the “new normal.” Over the medium term, China Bank will focus on core business growth, asset quality improvement, and digital banking transformation.

“It is to be noted, however, that recovery is also very much dependent on how the Philippine economy, as a whole, is able to weather the COVID-19 contagion,” said PhilRatings.

 
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