Moody’s affirms BPI, BDO investment-grade ratings
Moody’s Ratings affirmed the investment-grade ratings and stable outlooks of Bank of the Philippines Islands (BPI) and BDO Unibank Inc., while warning that the banks may face higher credit costs as they build buffers against potential deterioration in loan quality stemming from the Middle East crisis and its impact on retail borrowers.
In separate actions on May 20, the debt watcher maintained its “Baa2” ratings on both banks, with the stable outlook signaling no expected rating change over the next one to two years.
For BPI, Moody’s said its decision reflected the bank’s strong profitability, adequate capital, healthy liquidity and stable funding supported by its solid deposit franchise.
These credit strengths, the agency said, balanced the bank’s weakening asset quality, driven by strong growth in the higher risk retail segments, as well as challenges in its corporate segment.
Moody’s said it expects the retail segments to experience further strain in 2026, given the shrinking financial buffers of retail borrowers amid higher inflation in the Philippines.
“Although the bank has tightened credit underwriting and plans to moderate its retail loan growth, we expect the bank’s asset risks to remain elevated, with credit costs normalizing closer to the 0.9 percent range in 2026,” the firm said.
“The bank’s [BPI] high concentration to large corporate loans and long-dated investment securities will also pose risks to its asset quality,” it added.
Meanwhile, Moody’s said BDO maintained good asset quality, strong funding and liquidity, as well as good profitability and adequate capital.
It highlighted BDO’s dominant deposit franchise, which underpins a high share of low-cost funding, with current and savings accounts accounting for 68 percent of deposits as of end-2025.
Looking ahead, Moody’s said it expects BDO’s problem loan ratio to remain largely stable in 2026 supported by write-offs on its unsecured retail loans.
“We expect credit costs to remain elevated as the bank’s unsecured retail loans continue to grow and season following strong growth over 2023-2025,” Moody’s said. “The bank’s [BDO] high concentration to large corporate loans and long-dated investment securities will also pose risks to its asset quality.”
