BDO’s asset quality stable whilst funding, liquidity its ‘key strengths’: Moody’s

Problem loan ratio coverage is one of the strongest in the Philippines.

BDO Unibank’s asset quality has remained stable despite high consumer loan growth over the past three years, according to Moody’s.

Asset quality has grown at a compound annual growth rate of 14.5% between 2022-2024.

Problem loan ratio is unchanged at 1.9% at end 2024 and is expected to remain stable in 2025.

Its problem loan ratio coverage is one of the strongest in the Philippines, at 148% as of end-2024.

“We expect its problem loan ratio to remain stable in 2025, with unseasoned loan risks partially mitigated by the bank's track record of strong underwriting and its focus on consumer loan origination from its current depositor base,” Moody’s said.

Profitability improved to 1.77% in 2024 from 1.69% a year before thanks to a stable net interest margin, higher non-interest income, and lower credit costs, Moody’s said.

“We expect the bank's profitability to remain broadly stable at 1.6%-1.7% in 2025, with NIM compression amid policy rate cuts to be partially offset by loan growth supported by reserve requirement ratio cuts, as well as the bank's growth in higher yielding consumer loans,” Moody’s said.

Funding and liquidity will remain its key strengths, with a robust and growing dominant franchise supporting its deposit market share, which was the highest among its domestic rated-peers as of end-2024, the ratings agency added.

“Its reliance on market funds remains low at 6% of its tangible banking assets and its liquidity remains strong, with a liquidity coverage ratio of 132% as of end-2024,” it added.