Moody’s Ratings has affirmed the credit ratings of three of the Philippines’ largest banks—BDO Unibank Inc., Bank of the Philippine Islands (BPI), and Metropolitan Bank & Trust Co. (Metrobank)—on the back of their solid capital positions, stable profitability, and strong liquidity, even as they face challenges from rising consumer loan exposure and shifts in funding structures.

Moody’s, a global credit rating agency, kept its Baa2/P-2 ratings for BDO Unibank unchanged, including the bank’s senior unsecured debt and medium-term note program. Ratings for BDO’s foreign currency debt, such as long-term bonds and short-term borrowings, were also maintained.

According to the credit rater, its BDO affirmation “reflects the bank’s stable asset quality and strong credit underwriting despite its high consumer loan growth over the past [three] years. At the same time, the affirmation reflects the bank’s robust funding and liquidity, good profitability and adequate capital.”

BDO’s asset quality stayed stable despite rapid consumer loan growth from 2022 to 2024, with its problem loan ratio steady at 1.9 percent by end-2024. Strong underwriting and a solid depositor base help manage risks, while its 148 percent loan coverage remains among the highest locally.

“We expect its problem loan ratio to remain stable in 2025, with unseasoned loan risks partially mitigated by the bank's track record of strong underwriting and its focus on consumer loan origination from its current depositor base.”

Its problem loan coverage ratio stood at 148 percent as of end-2024, “one of the strongest among its domestic rated-peers,” reflecting strong loss-absorption capacity.

BDO’s return on assets rose to 1.8 percent in 2024 from 1.7 percent, supported by steady margins, higher non-interest income, and lower credit costs. Moody’s expects the bank’s profitability to stay stable this year, with loan growth and non-interest income helping offset margin pressures.

Its capital ratio held steady at 14.6 percent in 2024, up from 14.4 percent in 2023 and significantly higher than 13.7 percent in 2019. The ratio is expected to remain around 14 to 15 percent in 2025, supported by strong internal capital generation.

“Meanwhile, we expect the bank’s funding and liquidity to remain its key strengths, with a robust and growing dominant franchise supporting its deposit market share, which was the highest among its domestic rated-peers as of end-2024,” Moody’s said.

BDO maintains strong liquidity with a 132-percent coverage ratio as of end-2024, while keeping low reliance on market funding at just six percent of tangible banking assets.

BPI

Moody’s has also affirmed BPI’s ratings, including its deposit, counterparty risk, and senior unsecured debt ratings, along with its baa2 baseline credit assessment (BCA). Its outlook on all applicable ratings remains stable.

According to the credit rater, the affirmation “reflects the bank’s adequate capital, healthy liquidity, and good profitability.”

“These credit strengths are balanced against BPI’s deteriorating asset quality, driven by its rapid loan growth into the higher risk consumer segments,” Moody’s noted.

BPI’s problem loan ratio stayed stable at 3.1 percent by end-2024, but its soured loan ratio rose to 2.3 percent by March, due to higher delinquencies in unsecured loans like credit cards and personal loans. Loan coverage also dropped to 77 percent from 99 percent due to increased retail loan write-offs.

“We expect further weakening in the bank’s asset quality as its loans season, and as a consequence of its target to double-digit growth in higher risk segments such as its credit cards, personal and business bank (small and medium-sized enterprises) loans,” Moody’s said.

This shift could move BPI toward slightly riskier credit levels as it works to expand financial access, it said.

BPI’s return on assets (ROA) rose to 1.9 percent in 2024, supported by higher margins and low credit costs, and remained stable at around two percent in early 2025. However, it is expected to ease this year due to rising credit costs tied to growth in unsecured retail loans.

Its capital ratios declined last year due to strong loan growth, with its common equity tier 1 (CET1) ratio falling to 13.9 percent before recovering to 14.7 percent by March. Moody’s expects the ratio to stay around 13.5 to 14 percent, supported by solid earnings and moderate dividend payouts.

BPI’s funding and liquidity remain strong, with market fund reliance low at five percent and liquid assets making up 27 percent of tangible banking assets as of 2024.

“We expect the bank’s funding and liquidity metrics to remain strong despite some deterioration as the bank accelerates growth,” Moody’s said.

Metrobank

Moody’s said the affirmation of Metrobank’s Baa2 ratings and baa2 BCA “reflects the bank’s strong solvency, balanced against weakened funding and liquidity metrics.”

“While we assume Metrobank will receive support from the [government] in times of need, the bank ratings do not benefit from government support uplift because its BCA is already at the same level as the sovereign rating,” which is Baa2 stable, it said.

Metrobank’s strong solvency is backed by solid asset quality and steady profitability. Its bad loan ratio stayed stable in March, despite higher retail loan delinquencies, with non-retail loans expected to support overall asset quality. The bank also has a strong loan loss reserve, covering 151 percent of problem loans.

The bank’s annualized ROA remained steady at 1.4 percent in the first quarter of the year, compared to 1.5 percent a year ago. Moody’s expects the bank’s profitability to dip slightly over the next 12 to 18 months but should stay above one percent.

Its capitalization has declined in recent years, with its CET1 ratio falling to 14.7 percent in March from 16 percent a year earlier. Moody’s expects this ratio to remain stable, viewing 15 percent as enough to support the bank’s loan growth.

Metrobank’s funding structure weakened over the past 12 to 18 months, with market funds rising to 21 percent of tangible banking assets in March, up from 10 percent last year, as the bank relied more on cheaper funding to fuel growth.

“We expect the reliance on market funds to remain broadly stable at the current level. While loan growth will moderate in 2025, we expect the bank to maintain its net interest margin by funding its growth with cheaper sources of funds,” Moody’s said.

The bank maintained a strong liquidity buffer with a coverage ratio of 184 percent as of March 2025—down from 276 percent a year earlier, but still above that of some rated peers in the Philippines.