Moody’s Ratings affirmed the long-term deposit ratings of three major Philippine lenders, shifting its outlook on Security Bank Corp. to stable as capital pressures ease following the sharp slowdown in credit expansion.

The global debt watcher kept the "Baa2" ratings—consistent with the Philippine sovereign credit grade—for Security Bank, Philippine National Bank, and China Banking Corp. In a sweeping review of the sector released Monday, Moody’s ended a period of negative outlook for Security Bank, citing a dramatic moderation in loan growth that has preserved the lender's capital buffers.

“Negative pressure on the bank's capitalization has abated amid much slower credit growth,” Moody’s wrote in a rating action statement released on Monday, April 13.

According to Moody’s, SBC’s loan growth moderated dramatically to three percent in 2025, compared to 25 percent the previous year, allowing its tangible common equity to risk-weighted assets (TCE/RWA) ratio to improve to 16.4 percent.

While the bank’s stage 3 loans ratio rose slightly to three percent, Moody’s expects its “good capitalization” to provide a sufficient buffer against “modest deterioration in asset quality and profitability in 2026-2027.”

Moody’s maintained its ‘stable’ outlook for PNB, highlighting that the bank’s “capitalization remains its core strength”. PNB reported a TCE/RWA ratio of 23.8 percent, the highest among its domestic rated peers as of last year.

Likewise, PNB dominates in funding, maintaining a current and savings account (CASA) ratio of 75 percent, the highest among its peers.

Moody’s noted PNB’s sustained improvement in asset quality, as its problem loan ratio fell to 5.3 percent from a peak of 11.9 percent in 2021—a pandemic year.

Notably, PNB is the only one among the three whose profitability is expected to remain broadly stable in 2026, supported by stable net interest margins and low credit costs.

Chinabank also saw its ‘Baa2’ rating affirmed and stable outlook. While its credit profile is constrained by “modest funding and liquidity,” its probability of government support was revised to “high from moderate.”

This upgrade was driven by the bank’s significant deposit share of 6.6 percent of the total system, while its capitalization remains a strength at 17.4 percent.

However, a liquidity coverage ratio of 122 percent indicates a weaker ability to withstand liquidity stress compared with peers. Unlike PNB, Chinabank’s profitability is expected to moderate in 2026 due to the absence of one-off gains.

Moody's warned of emerging risks for the three lenders, anticipating a mild deterioration in asset quality over the next 12 to 18 months. This pressure is driven by the seasoning of the retail loan portfolio, the impact of the flood-control probe, and the rising cost of living, which may weigh on the repayment capacity of retail borrowers.

Further, while PNB expects stability, profitability for SBC and CBC is expected to moderate as internal capital generation aligns with (or outpaces) consumption, while credit costs remain elevated.

The Baa2 ratings, which match the Philippine sovereign rating, reflect a baseline of stability for these lenders in a complex macroeconomic environment.