Fitch: RCBC's credit outlook stable with ‘BB-’ rating

International credit watcher Fitch Ratings has given the Rizal Commercial Banking Corp. (RCBC) a ‘BB-’ credit rating, reflecting the bank’s “vulnerable asset quality, counterbalanced by its reasonable capital, reserves, and earnings buffers." A member of the Yuchengco Group of Companies, RCBC is the Philippines' fifth largest private domestic commercial bank, according to the company’s official site. Fitch has a “stable outlook" for RCBC, projecting “a considerable improvement in RCBC's balance sheet health" in the long-term. RCBC’s Issuer Default Rating (IDR) of BB- is labeled “speculative" by the ratings agency, as it “indicates an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time." A Fitch rating measures the level of credit risk associated with a particular financial corporation, while IDRs measure the vulnerability of an entity to the possibility of defaulting on financial obligations. Meanwhile, Fitch also gave RCBC an individual rating of “D," marking it as a bank that has “weaknesses of internal and/or external origin." The D rating indicates “concerns regarding its profitability and balance sheet integrity, franchise, management, operating environment or prospects," according to Fitch. Banks in emerging markets such as the Philippines are necessarily faced with “a greater number of potential deficiencies of external origin," the agency cautioned. “There are downsides risks arising from the uncertain external environment, which could in a worst case result in a fresh downturn scenario," Fitch said. Individual ratings are assigned by Fitch to banks that are legal entities. The agency attempts to assess the credit risk that would be associated with a bank if it were entirely independent with no external support to rely on. “These ratings are designed to assess a bank’s exposure to, appetite for, and management of risk, and thus represent the agency’s view on the likelihood that it would run into significant financial difficulties such that it would require support," Fitch added. Ratings assigned by Fitch are opinions based on established criteria and methodologies that Fitch is continuously evaluating and updating, according to the agency. — Larissa Mae Suarez/VS/LBG, GMANews.TV