Fitch Ratings has revised the Outlook on the Long-Term Issuer Default Rating (IDR) of Bank of the Philippine Islands (BPI) to Negative from Stable and affirmed the IDR at ‘BBB-‘.
The revision follows a similar revision in the Outlook of the Philippine sovereign rating. For details, see Fitch Revises Philippines’ Outlook to Negative; Affirms at ‘BBB’.
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At the same time, Fitch has downgraded the Viability Rating (VR) to ‘bb+’ from ‘bbb-‘. The Philippines’ economy has recovered more slowly than our earlier expectation, with GDP continuing to shrink by 4.2% in 1Q21.
GDP to grow this year after declining last year
Business confidence and private consumption remain sluggish and pose sustained challenges to banking system asset quality.
Fitch expects the Philippines’ GDP to grow at 5% in 2021 (2020: -9.6%), before accelerating to 6.6% in 2022 and 7.3% in 2023.
The less vigorous economic recovery is likely to weigh on loan demand and business opportunities over the next 12 to 18 months.
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By GlobalDataWe have thus revised the Philippine bank operating environment score to ‘bb+’/negative’ from ‘bb+’/stable. The operating environment score acts as a constraining factor on the bank’s VR.
