Lucio Co-led Philippine Bank of Communications (PBCom) was assigned an issuer credit rating of PRS Aa minus (corp.), with a Stable Outlook, by Philippine Rating Services Corporation (PhilRatings).
An issuer credit rating, also sometimes called corporate credit ratings or company ratings, or counterparty credit ratings, is a measure of a company’s over-all creditworthiness.
An issuer credit rating can be obtained for commercial paper issuances, to rate companies in general, or for any other transaction that does not require an issued credit rating.
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 those of other Philippine corporates. The “minus” further qualifies the assigned rating.
A Stable Outlook, on the other hand, indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said PBCom’s assigned rating and Outlook took into account the bank’s enhanced growth potential following the approval of its universal banking license and its experienced management, complemented by synergies within its major shareholder’s ecosystem.
Also taken into consideration is the bank’ sustained earnings growth, but short-term profitability will be subdued; notable improvements in asset quality; and telatively modest share of low-cost current account and savings account (CASA) to total deposits.
PBCom secured the Certificate of Authority to operate as a universal bank from the Bangko Sentral ng Pilipinas (BSP) in September 2022.
With the license upgrade from commercial bank to universal bank, PBCom can provide a broader range of products and services similar to the country’s top lenders.
Presently, PBCom is a mid-sized player in the domestic banking industry, with total assets amounting to P148.6 billion as of end-June 2024.
The bank has a network of 94 branches (four of which are branch-lites or in pop-up format inside select Puregold stores), 166 automated teller machines (ATMs), and 78 cash deposit machines. As of end-March 2024, PBCom was the country’s 17th largest bank based on assets and deposit liabilities, 15th based on capital, and 16th based on loans and receivables (net).
The Co Family, led by Lucio Co, founder of Puregold Price Club, Inc. (Puregold), beneficially owned 57.2 percent of PBCom, as of end-2023.
PBCom’s aspiration to become a significant financial partner of micro, small and medium-sized enterprises (MSMEs) aligns well with Co’s extensive network of customers and suppliers.
This network can support PBCom’s expansion efforts and provide the bank with competitive advantage in the MSME and retail markets. PBCom aims to have a highly-synergistic operational model by leveraging on the data assets and physical network of this ecosystem.
For full-year 2024, PBCom anticipates substantial growth in its net interest income, but such will be tempered by higher operating expenses.
Its gross non-performing loan ratio is projected to further improve, largely on account of loan portfolio expansion.
While PBCom sees CASA posting double-digit growth going forward, time deposits will continue to remain as a significant contributor to the bank’s deposit base.