“The issuer rating for iBank is PRS Aa minus,” PhilRatings announced. A rating of PRS Aa means that the bank has a “…strong capacity to meet its financial commitments relative to that of other Philippine obligors and differs from the highest rated corporates only to a small degree.”
iBank has committed to obtain an issuer credit rating from PhilRatings in the next four years. An issuer credit rating can be qualified by a plus or a minus sign to indicate the relative position of an issuer in a particular rating category.
In assigning the rating, PhilRatings considered the bank’s sound funding base, the adequacy of its capital in relation to its asset quality, and market challenges posed by an industry which has become increasingly competitive. iBank is the country’s twentieth largest bank, with assets of P51.9 billion as of end 2004. Its share of the commercial banking sector’s loans and deposits in 2004 stood at 8.3% and 9.1%, respectively. At present, the bank has 75 branches, 56 of which are located in Metro Manila.
iBank is a relatively young bank, having started commercial operations in September 1995. The bank’s top management headed by Mr. Ramon Sy as President and Chief Executive Officer, has shown knowledgeability, skills, and competence in steering operations along a clear competitive strategy over the last ten years, focusing on quality of service as its distinctive competence. Given its size, the bank has ably competed in an industry dominated by larger banks with larger assets and wider branch networks. To its credit, iBank has managed to hold on to its steady course of prudent, programmed expansion, anchored on its access to low-cost funds and its reinforced prospecting and marketing efforts.
iBank’s asset quality is adequate. Its non-performing assets (NPA) to loans ratio of 23% is still slightly higher than that for the commercial bank sector of 20.8%. On the other hand, iBank’s loan loss reserves to NPA ratio of 42.5% in 2004 is better than the 35% for the sector. It should likewise be noted that its NPA ratio has been consistently improving, with the level of non-performing loans (NPLs) being reduced since year 2001.
Earnings in 2004 were at P523 million, corresponding to a net profit after tax to average assets ratio of 1.1%, at par with that for the industry. The bank’s capital to risk assets ratio as of end-2004 stood at 15.8%, exceeding the minimum 10% ratio required by present banking regulations. iBank intends to issue up to P2.5 billion in unsecured subordinated notes in the first quarter of 2006.
iBank has shown strength in its deposit-taking activities, with its deposits to liabilities ratio of 85.4% as of end-2004. This is better than the sector’s average of 74.8%. As of December 2004, lower-cost savings and demand deposits made up 75% of iBank’s total deposits amounting to P39.5 billion.