Bank of Commerce (BankCom), an affiliate of diversified conglomerate San Miguel Corporation (SMC), has been assigned an Issuer Credit Rating of PRS Aa plus (corp.), with a Stable Outlook, by Philippine Rating Services Corporation (PhilRatings).
A company rated 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 “plus” further qualifies the assigned rating.
A Stable Outlook, on other hand, indicates that a rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said the assigned issuer rating takes into account that BankCom remains as a mid-sized bank, but the approval of its universal banking license brings growth opportunities.
It also considered BankCom’s solid support from the SMC Group and synergies with its ecosystem, the bank’s highly-experienced management, and its improved earnings, albeit profitability remained modest.
BankCom was the 15th largest in terms of asset size among universal and commercial banks in the Philippines, as of end-2021. In terms of capital, it was the 14th largest bank.
The bank has a network of 140 branches and 253 automated teller machines (ATM), as of end-March 2022.
In December 2021, the Bangko Sentral ng Pilipinas (BSP) approved the upgrade of BankCom’s commercial banking license to a universal banking license, subject to certain regulatory requirements.
PhilRatings said this opens new revenue opportunities for the bank given that in addition to the functions of a commercial bank, universal banks are allowed to offer a variety of additional products and services including investment banking services and bancassurance products.
To meet a key requirement for the upgrade of its banking license, BankCom undertook an Initial Public Offering (IPO) of its shares in March 2022.
Proceeds from the IPO would be used to fund the bank’s lending activities, as well as finance capital expenditure requirements in connection with the upgrading of its ATM fleet and its core banking system.