Debt watcher Moody’s Investors Service affirmed over the weekend the medium-grade “Baa2” rating of Union Bank of the Philippines following the increase in its capitalization earlier this year.
The bank’s outlook remained negative because of uncertainty related to its plan to improve its core capital ratio to a level that will be commensurate with that of its domestic and regional peers.
Moody’s also affirmed the bank’s foreign currency senior unsecured medium term note program rating at Baa2, long-term local and foreign currency counterparty risk ratings at Baa2, long-term counterparty risk assessment at Baa2 and baseline credit assessment (BCA) and adjusted BCA at baa3.
Baa2 rating is considered medium grade and as such may possess certain speculative characteristics.
“The ratings and BCA affirmation reflect UBP’s mildly improved solvency position following the P12 billion capital increase in February 2023, following a material capital decrease related to the acquisition of Citigroup retail business,” Moody’s said.
Moody’s said the affirmation also reflects its expectation of stabilizing asset quality due to post-pandemic economic recovery and higher core profitability in the next 1 to 2 years from cost synergies from the recent acquisition and the bank’s expansion into the higher-yielding retail loans.