Bank of the Philippine Islands (BPIPM)

BPI’s current credit level remains sufficiently investment-grade-like for a leading private-sector Philippine bank, and senior issuer credit is supported by the deposit base, earnings capacity, regulatory capital, and market access. The direction is not materially deteriorating, but as the loan mix expands toward consumer, SME, and Business Banking, asset quality and provisioning coverage require somewhat more cautious monitoring. The probability of a rapid change in credit level or direction is not high at present, but if rising NPL ratios, declining coverage, a rising loan-to-deposit ratio, and deterioration in sovereign / rating outlook occur together, the pace of change could accelerate.

The basic view for senior bond investors is that BPI can be treated as an “investment-grade bank bond supported by a strong domestic banking franchise,” while current credit costs and declining coverage should be considered when checking market levels. BPI has high ROE and NIM, and pre-provision profit is also substantial, giving it capacity to absorb a normal rise in credit costs. In addition, deposit scale, CASA, the wealth business, non-interest income, and access to domestic and international bond markets reinforce issuer credit.

At the same time, there are still issues to confirm before buying BPI as a simple defensive bank credit. The NPL ratio rose to 2.42% in 1Q 2026, and the coverage ratio declined to 87.15%. Non-institutional loans are growing rapidly, and the quality of Business Banking, cards, personal loans, housing, auto, and motorcycle loans needs to be assessed separately. If credit costs remain elevated, BPI’s earnings growth and capital headroom will be constrained.