Fitch Ratings says a potential stake sale by the Development Bank of the Philippines (DBP) could bolster its capital position and lead to an upgrade in its standalone credit strength. The proposed amendments to DBP's charter, allowing the government to sell part of its stake, are unlikely to affect its sovereign support-driven Issuer Default Ratings (IDR). However, a stake sale could restore DBP's underlying capital buffer, which was weakened by a P25-billion capital infusion to the Maharlika Investment Fund in 2023. Fitch expects DBP's capitalization to improve further as profitability rises and credit costs decline.
A POTENTIAL stake sale could strengthen the Development Bank of the Philippines’ capital position, which may lead to an upgrade in its standalone credit strength, according to Fitch Ratings.
The state-run lender’s VR was downgraded to “bb-” from “bb” in March 2024 due to its P25- billion capital infusion to the Maharlika Investment Fund , the country’s sovereign wealth fund, in 2023. “We expect the bank’s capital buffers to continue to rise steadily as profitability improves, helped by lower credit costs amid a robust economic environment,” Fitch Ratings said.
CAPITAL INJECTION CREDIT RATINGS DEVELOPMENT BANK OF THE PHILIPPINES STAKE SALE SOVEREIGN SUPPORT
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