Development Bank of the Philippines (DEVPHI)

DBP’s current credit strength is constrained at the standalone bank level by high NPLs and reliance on capital relief, but because of its extremely strong relationship with the Philippine government, it is assessed on a supported basis as an investment-grade government-owned policy bank. It is too early to view the direction of credit strength as clearly improving solely on the basis of the improvement in NPLs at end-December 2025. Instead, the credit direction should be read as stable to somewhat cautious, driven by the Philippine sovereign outlook and capital policy. The probability of a rapid change in credit strength is not high in normal times, but the supported rating and market assessment could move relatively quickly if there is a sovereign downgrade, failure of capital relief, renewed NPL deterioration, or a change in the government-support framework.

DBP is supported by full government ownership, policy mandate, its non-substitutable role as an infrastructure bank, a domestic deposit base, regulatory liquidity indicators, and explicit government-support expectations from rating agencies. In particular, S&P’s assumption of “almost certain” government support, and Fitch’s emphasis on GSR and sovereign linkage based on BusinessWorld reporting and the 2025 Fitch summary, are central to DBP’s credit analysis. Attempting to explain the rating level only from standalone profitability and NPL metrics would misread DBP’s credit strength.

At the same time, the constraints are clear. The gross NPL ratio of 7.12% at end-December 2025 is high, and relief-excluded CAR of 11.31% cannot be described as thick. As a policy bank, DBP lends to sectors with higher risk than commercial banks, so if asset quality does not improve, reliance on government-support expectations will increase. Post-MIF capital policy, the new DBP bill, dividend relief, and the presence or absence of capital injection will materially affect the reading of standalone credit strength.