Bank of the Philippine Islands Issuer Summary

Report date: 2026-05-13
Issuer: Bank of the Philippine Islands
Sector: Philippine banking
Primary credit focus: Issuer credit, senior unsecured debt, foreign-currency senior bonds, and the durability of deposits, capital, and asset quality

1. Business Snapshot and Recent Developments

Bank of the Philippine Islands (“BPI”) is a leading private-sector universal bank based in the Philippines. The starting point for credit analysis is to view BPI not as a “high-growth consumer finance company” or a “policy bank with a government guarantee,” but as an issuer where a deposit-led leading domestic bank is expanding retail, SME, cards, personal loans, and wealth management while managing credit costs and capital headroom. BPI is one of the oldest banks in the Philippines and provides deposits, lending, payments, asset management, insurance, investment banking, securities brokerage, foreign exchange, and treasury services. Its broad product base and domestic customer touchpoints support credit strength, but they do not imply an explicit government guarantee or parent guarantee.

BPI’s current credit story is superficially strong. At end-2025, consolidated total assets were PHP3.65tn, gross loans were PHP2.62tn, deposits were PHP2.84tn, and equity attributable to shareholders was PHP476.6bn. Net income attributable to shareholders in 2025 was PHP66.6bn, up 7.4% year on year. ROE was 14.5% and ROA was around 2.0%, indicating that the bank maintained adequate profitability. In 1Q 2026, net income was PHP16.9bn and total revenues were PHP50.9bn, with earnings still higher year on year. On these metrics alone, BPI can be treated as a major Philippine bank with high earnings capacity.

However, the first change credit investors should focus on is not profit growth but the movement in asset quality and provisions. Provisioning and impairment losses were PHP17.8bn in 2025, sharply higher than PHP6.6bn in 2024. The NPL ratio at end-2025 was 2.18%, only slightly higher than 2.13% at end-2024, but the NPL coverage ratio declined from 106.2% to 94.9%. In 1Q 2026, the NPL ratio rose to 2.42% and the coverage ratio fell further to 87.15%. These figures do not indicate immediate credit distress, but given that BPI’s loan growth is extending into higher-yielding and higher-risk areas, they should not be dismissed as mere accounting noise.

The composition of loan growth is also important. In 1Q 2026, total loans increased 13.5% year on year, but institutional loans grew only 8.9%, while non-institutional loans increased 24.9%. Within this, Business Banking, Credit Cards, and Personal Loans showed high growth. These businesses support profitability and the customer base, but compared with prime corporate lending, they are more likely to deteriorate earlier in response to changes in the economy, employment, interest rates, household leverage, and SME cash flow. Therefore, in assessing BPI’s credit, investors need to track not only “that it is a major bank,” but also “which loans are growing.”

BPI’s credit profile can be summarized as follows.

The key feature of full-year 2025 was that earnings increased while provisions moved materially higher. Total revenues were PHP195.3bn, up 14.8% year on year; net interest income increased 16.0%; and non-interest income also increased 11.0%. Expenses also increased, but the cost-to-income ratio improved to 47.2%. This indicates that the operating platform and earnings management have not weakened. At the same time, provisions increased 168.9%, which could reflect normalization of credit costs, a change in portfolio mix, or pre-emptive provisioning for future losses. This report does not automatically classify the provision increase as “deterioration,” but reads it as a necessary cost associated with loan expansion and a changing risk mix. However, the decline in coverage and the increase in the NPL ratio in the first quarter are significant items for future confirmation.

1Q 2026 was a quarter in which strong earnings and gradual asset-quality deterioration appeared at the same time. Net income increased only 1.7% year on year and 4.9% quarter on quarter. Total revenues increased 13.9%, net interest income increased 13.7%, and non-interest income increased 14.5%, indicating continued top-line growth. At the same time, provisions were PHP5.5bn, the NPL ratio was 2.42%, and the coverage ratio was 87.15%, showing that earnings growth has become a tug-of-war between loan expansion and higher credit costs. BPI is not yet a “bank whose earnings are collapsing because of asset deterioration,” but it has become a “bank where credit costs associated with loan growth should now be monitored in earnest.”

In BPI’s recent funding, both domestic peso bonds and US dollar senior bonds are important. BPI’s capital markets issuance page shows BPI SIGLA Bonds due 2028, BPI SINAG Bonds due 2026, and USD Bonds due 2029, 2030, and 2035. Deposits are the bank’s main funding source, but because BPI is an investment-grade bank issuing foreign-currency senior bonds, bond investors need to consider not only peso deposits but also foreign-currency liquidity, currency mismatches, maturities, and individual bond terms. This report focuses primarily on issuer credit and treats individual bond terms as items not yet confirmed.

In one sentence, BPI is a leading Philippine bank with a substantial domestic deposit base and earnings capacity, but as loan growth extends into higher-yielding and higher-risk areas, it is an issuer whose asset quality, provisioning coverage, loan-to-deposit ratio, and foreign-currency bond liquidity management should be monitored together.

2. Industry Position and Franchise Strength

The Philippine banking sector is a market where deposits and lending can expand relatively easily, supported by a domestic economy, population, consumption, remittances, and corporate investment that still have room to grow. At the same time, the sector is credit-sensitive to the interest-rate cycle, inflation, household burden, fiscal and sovereign ratings, and the political and regulatory environment. In analyzing BPI, it is necessary to look not only at the company’s own numbers but also at how much room it has within the Philippine banking system.

According to Bangko Sentral ng Pilipinas (BSP) data cited in public media reports, the Philippine banking system had total assets of about PHP29.9tn, deposits of about PHP21.9tn, loans of about PHP17.1tn, an NPL ratio of about 3.1%, and loan-loss allowance coverage of about 97.2% at end-2025. The banking system’s capital adequacy ratio at the same point was also reported to be above the regulatory minimum. Because the primary BSP pages were not fully confirmed at the time this report was prepared, these figures are treated as industry background and distinguished from BPI’s official numbers.

Against this industry backdrop, BPI is a very large player as a leading bank. BPI’s total assets of PHP3.65tn at end-2025 are roughly a little over 10% of total banking system assets of about PHP29.9tn. Loans of PHP2.62tn are in the mid-teens as a share of system loans of about PHP17.1tn, and deposits of PHP2.84tn are a little over 10% of system deposits of about PHP21.9tn. Strictly speaking, the consolidation scope and standards are not fully identical, but it is clear that BPI is not merely a mid-sized bank; it is a systemically important leading private-sector bank in domestic credit intermediation in the Philippines.

In peer comparison, BPI should be viewed as one of the major private-sector Philippine banks alongside BDO Unibank and Metropolitan Bank & Trust Company. BPI is not the largest bank, but it combines scale, brand, deposits, asset management, corporate and retail customers, and investment-grade ratings, with access to both domestic and international capital markets. Therefore, BPI’s credit is closely linked to confidence in the Philippine banking sector as a whole, the sovereign rating, the stability of domestic deposits, and BSP regulation and supervision.

The first franchise strength is deposits and customer touchpoints. Deposits were PHP2.84tn at end-2025, exceeding loans. At end-2025, BPI had 1,318 branch licenses and overseas offices, 2,610 ATMs, and 23,580 employees. In addition, BPI is increasing customer touchpoints beyond traditional branches through agency banking and digital channels. The 2025 Integrated Report states that partner stores for agency banking expanded to more than 7,000 and that more than 500mn transactions were processed across multiple digital platforms. Such customer touchpoints support both deposit gathering and fee income.

The second strength is the asset management and wealth management platform, including BPI Wealth. At end-2025, BPI Wealth had assets under management of PHP1.83tn and a trust-industry market share of 19.92% based on company disclosure, positioning it as one of the largest independent trust companies in the Philippines. Asset management and wealth revenues are affected by market prices and customer flows, but they provide an earnings source that is not dependent only on loan spreads. In bank credit, the important point is not only that net interest income is strong in good years, but also how far non-interest income can absorb costs in years when credit costs rise.

The third strength is history and brand. BPI has a long operating history in the Philippines and historical and personnel relationships with the Ayala group. The current chairman also has an Ayala-related background, and BPI’s brand, governance, and customer base show an Ayala imprint. However, this should not be misread. The Ayala affiliation may contribute to brand, corporate governance, access to corporate customers, and confidence from domestic investors, but it is not an explicit parent guarantee. Holders of BPI bonds should evaluate BPI based on its own balance sheet, deposits, capital, and regulatory supervision, and should not treat Ayala as a guarantor.

At the same time, franchise strength does not eliminate credit risk. Philippine banks are affected by the domestic economy, household consumption, real estate, infrastructure investment, corporate credit, foreign exchange, overseas remittances, and policy rates. BPI’s presence in a growth market creates earnings opportunities, but when loan growth is fast, underwriting standards, pricing, collateral valuation, collection infrastructure, and provisioning policy are tested. In particular, because non-institutional loans are growing much faster than institutional loans, franchise growth should not be read directly as credit improvement; loan quality needs to be decomposed.

BPI’s approximate position within the Philippine banking sector is summarized below. The industry data include BSP figures cited in media reports and are not audited comparisons on a fully identical basis.

This table shows that BPI has leading-bank strength in scale and NPL ratio, while declining coverage and a rising loan-to-deposit ratio should not be overlooked even in comparison with the industry average. BPI’s franchise is strong as a foundation of credit quality. However, it is natural for a franchise to look strong during a favorable credit cycle, and what investors should assess is whether deposits remain, capital remains, and provisions can be absorbed in a weaker environment.

3. Segment Assessment

In BPI’s segment assessment, it is necessary not simply to list the broad financial services the company provides, but to distinguish which earnings sources are stable and which loans are more likely to generate credit costs. Bank segment analysis is not a revenue-composition table; it is an analysis of risk assets that consume capital. In BPI’s case, Institutional Banking, Consumer Banking, Business Banking / SME, BPI Wealth, and insurance, investment banking, and securities-related functions need to be viewed together.

Institutional Banking is the core supporting BPI’s scale and position as a leading domestic bank. The 2025 Integrated Report states that the institutional loan portfolio reached PHP1.83tn at end-2025, up 10.4% year on year. Transactions with large corporates, infrastructure, power, acquisition finance, supply chains, treasury, and cash management increase customer stickiness and fee income for the bank. From a credit perspective, the strength is that lending to high-quality corporates is linked to deposits, payments, foreign exchange, and investment banking services.

However, Institutional Banking does not mean low risk. Large corporate loans have large balances per exposure and tend to be concentrated in construction, real estate, power, infrastructure, conglomerates, and government-related projects. Participating in Philippine growth investment is an earnings opportunity, but if construction delays, regulation, tariffs, politics, foreign exchange, interest rates, or sponsor credit deteriorate, even a small number of exposures can generate large losses. Based on BPI’s disclosures, this report was not able to sufficiently confirm detailed risk amounts for commercial real estate, construction, single-name large exposures, and project finance. Therefore, Institutional is both a stable earnings source and an area where concentration risk should be checked in the next update.

Consumer Banking and non-institutional loans are central to both BPI’s growth and monitoring. In the company’s 1Q 2026 release, non-institutional loans increased 24.9% year on year, far above the 8.9% growth in institutional loans. Business Banking increased 96.3%, Credit Cards 33.3%, and Personal Loans 26.9%. These figures show that BPI is expanding credit not only to traditional large corporates, but also to a broader base of individuals and small and medium-sized enterprises.

The 4Q/FY2025 investor presentation showed that, out of total loans of PHP2.623tn at end-2025, institutional loans were PHP1.825tn and non-institutional loans were PHP798bn. The main non-institutional components were housing loans of PHP302bn, cards of PHP239bn, auto loans of PHP131bn, SME / Business Banking of PHP64bn, personal loans of PHP46bn, and microfinance of PHP17bn. The 1Q 2026 growth rates have been confirmed, but March-end balances for the same detailed categories have not been obtained, so the end-2025 balances need to be read together with the 1Q growth rates.

This growth has two sides for credit investors. First, yields are high and it supports diversification of revenue sources through fees, card payments, insurance, digital transactions, and customer data. The fact that BPI is increasing non-interest income not only from net interest income but also from card fees, transaction fees, insurance, wealth, foreign exchange, and trading is consistent with this growth. On the other hand, personal loans, cards, SMEs, and Business Banking tend to show delinquencies earlier when the economy slows. This is because they have structures involving thinner collateral, higher collection costs, more limited borrower information, and more direct effects from higher interest rates on households and SMEs.

Housing loans and auto / motorcycle loans are important in understanding BPI’s consumer lending. The 2025 Integrated Report discusses affordable housing products such as MyBahay, housing loan campaigns, and the onboarding of more than 14,000 housing loan customers. BPI’s auto and motorcycle loan portfolio increased 23% year on year in 2025, with an end-year balance of PHP131bn. Housing loans are collateralized, but they are affected by real estate prices, household income, interest rates, and employment. Auto and motorcycle loans, as consumer credit, are prone to risks in both delinquency and recovery value during economic downturns.

Business Banking / SME is important to BPI’s growth strategy, but it is one of the areas most sensitive to the credit cycle. BPI emphasizes MSME support and financial inclusion, and agency banking and digital channels broaden access to SMEs and sole proprietors. From a credit perspective, diversified small-ticket loans can reduce single-name concentration risk, but provisioning models, credit scoring, collection systems, geographic diversification, and sector diversification are important. During high-growth periods, delinquencies emerge later, so rapid growth in Business Banking should be viewed not only as profit growth but also as a potential source of future credit costs.

BPI Wealth supports credit strength in a different way from lending. At end-2025, AUM was PHP1.83tn and the number of customers was 1.46mn. Asset management and trust are businesses that generate fee income without materially expanding the balance sheet, and they help stabilize bank earnings. However, AUM is affected by market prices, and product reputation, liquidity, customer protection, and sales suitability are also important. For credit investors, BPI Wealth is positive as earnings depth outside net interest income, but it is not the same stable funding source as deposits.

Insurance, investment banking, securities, foreign exchange, and treasury operations contribute to BPI’s revenue diversification. Non-interest income in 2025 was PHP47.2bn, up 11.0% year on year. In 1Q 2026, non-interest income was PHP11.8bn, up 14.5% year on year. Card fees, insurance, wealth management, trading, and deal activity can supplement earnings when loan spreads narrow. However, trading income and deal income are affected by market conditions, so they should not be overvalued as stable earnings.

The credit interpretation by segment is summarized below.

Viewed through this segment assessment, BPI’s growth strategy does not improve credit strength in only one direction. Deposits, customer touchpoints, non-interest income, and digitalization are clear positives. At the same time, the more the loan mix moves into higher-yielding areas, the more closely asset quality, provisions, coverage, and capital consumption need to be examined. BPI’s credit depends on the balance between a strong banking franchise and the quality of the loans it is expanding.

4. Financial Profile and Analysis

BPI’s financial profile needs to be read as a combination of strong earnings capacity and signs of rising credit costs. From 2023 to 2025, BPI significantly increased total assets, loans, deposits, net interest income, and net income. At the same time, provisions increased materially in 2025, the NPL coverage ratio declined, and the loan-to-deposit ratio rose. Therefore, the core of financial analysis is not whether the bank is profitable, but how far earnings and capital can absorb rising credit costs.

Key metrics are as follows.

Profitability is strong. Net interest income in 2025 was PHP148.0bn, up significantly from PHP104.4bn in 2023. NIM expanded from 4.09% to 4.59%. The Philippine interest-rate environment, loan growth, and changes in the loan mix likely contributed. In bank credit, a high NIM is positive because it creates loss-absorption capacity. However, the higher the NIM, the greater the possibility that the bank is taking higher-yielding credit risk. In BPI’s case, because non-institutional loans are growing rapidly, margin improvement should not be viewed only as a simple strength.

Cost control is not a major issue at present. Operating expenses increased, but the cost-to-income ratio improved from 49.96% in 2023 to 49.25% in 2024 and 47.2% in 2025. Investments in technology, employees, transaction volume, agency banking, and digitalization increase costs, but revenue growth is outpacing them. From a credit perspective, the more important issue is how much future credit costs will consume pre-provision profit.

Pre-provision profit is substantial. Pre-provision profit in 2025 was PHP103.2bn, far above provisions of PHP17.8bn. This indicates that BPI can absorb a normal rise in credit costs. However, provisions increased materially in 2025, and BPI also recorded PHP5.5bn in 1Q 2026. Annualized, this could exceed the 2025 pace, so it is necessary to value the depth of pre-provision profit while monitoring whether the growth rate in credit costs continues.

In asset quality, the absolute level of the NPL ratio is not yet excessively high. The end-2025 figure of 2.18% and the 1Q 2026 figure of 2.42% may be below the approximate NPL ratio of around 3% for the Philippine banking system as a whole. However, BPI’s issue is direction rather than level. The ratio rose from 1.84% in 2023 to 2.13% in 2024, 2.18% in 2025, and 2.42% in 1Q 2026. This is a stage where investors need to determine whether asset quality is gradually normalizing after loan growth, or whether the higher-risk loan mix is beginning to show through.

The decline in the NPL coverage ratio should be viewed more cautiously. It has fallen from 156.1% in 2023 to 106.2% in 2024, 94.9% in 2025, and 87.15% in 1Q 2026. A decline in coverage does not necessarily mean under-provisioning. The appropriate level depends on collateral, expected recoveries, loan composition, accounting standards, and write-off policy. However, if coverage is declining while non-institutional loans are growing rapidly, the possibility of additional future provisions should not be underestimated. In the next update, NPL balances, Stage 2 / Stage 3 exposures, restructurings, delinquencies, collateral, and credit-cost ratios should be checked.

Capital supports issuer credit at present, but it is not unlimited against loan growth and rising credit costs. The CET1 ratio was 13.94% at end-2025 and remained 13.94% in 1Q 2026, while CAR was 14.75% at end-2025 and 14.8% in 1Q 2026. The company states that these ratios are above regulatory minimums. However, this report has not confirmed the details of the Philippine capital conservation buffer, D-SIB buffer, or any BPI-specific additional requirements. Therefore, the capital ratios are viewed as supporting issuer credit based on company disclosure, but this report does not describe them as “large excess capital.” For a bank growing loans rapidly, RWA growth, dividends, credit costs, foreign-currency bond issuance, and acquisition / integration costs need to be viewed together.

The rise in the loan-to-deposit ratio is important in liquidity assessment. The net loans to deposit ratio was 82.0% in 2023, 85.6% in 2024, and 90.4% in 2025, and the loan-to-deposit ratio was 91.95% in 1Q 2026. This shows that BPI is expanding loans while using its deposit base. A low-90% ratio is not immediately worrying, but if loan growth continues to exceed deposit growth, liquidity headroom may narrow and reliance on foreign-currency and peso bonds, as well as funding costs, may increase. In BPI’s credit, the gap between deposit growth and loan growth should be checked every quarter.

Including the 1Q 2026 figures makes the financial view clearer.

The overall assessment of the financial profile is that BPI has strong earnings capacity and manageable capital headroom, while asset quality is no longer in an improving phase and has entered a monitoring phase. BPI is not a bank that cannot generate earnings; rather, it is a bank whose high profitability can absorb credit costs. However, given the change in loan mix and the decline in coverage, investors should not take comfort from net income growth alone. The future focus is where the NPL ratio stabilizes, where the coverage ratio stabilizes, and how much CET1 remains while absorbing loan growth.

5. Structural Considerations for Bondholders

For BPI bondholders, the first distinctions to make are issuer credit, the framework for depositors and regulators, the security class of senior unsecured debt, and currency, jurisdiction, and individual terms. BPI is a bank, and unlike ordinary operating companies, it operates within a framework of deposits, central bank regulation, capital regulation, liquidity regulation, resolution, deposit insurance, and bank supervision. This institutional framework supports issuer credit, but the recovery ranking and treatment of bondholders require separate legal confirmation.

BPI’s main market debt includes domestic peso bonds and US dollar senior unsecured bonds. BPI’s capital markets issuance page discloses BPI SIGLA Bonds due 2028, BPI SINAG Bonds due 2026, USD Bonds due 2029, USD Bonds due 2030, and USD Bonds due 2035. The 2025 financial statement notes also confirm the USD 2029 bonds, USD 2030 bonds, USD 2035 bonds, and a USD 250mn green bond private placement solely subscribed by IFC. These are investor-facing debt instruments distinct from deposits, and for foreign-currency bonds in particular, currency, international settlement, tax, governing law, events of default, gross-up, regulatory changes, sanctions, and remittance risk need to be separately checked.

Looking only at issuer credit, BPI senior bondholders are supported by a substantial deposit base, earnings capacity, investment-grade ratings, CET1/CAR, BSP supervision, and market access. At the same time, bank senior bonds are not risk-free. Under bank stress, asset-quality deterioration, deposit outflows, closure of funding markets, regulatory intervention, capital raising, debt restructuring, and resolution can occur at the same time. BPI’s current numbers do not indicate such acute stress, but bondholders need to confirm the relationship with depositors and regulatory liabilities through the individual terms.

Domestic peso bonds and US dollar bonds have different risks to examine. Peso bonds are closely linked to the domestic investor base, BPI’s peso deposits, domestic interest rates, BSP policy, and domestic bond-market liquidity. US dollar bonds are affected by international investors, foreign-currency liquidity, US dollar funding costs, the Philippine sovereign’s assessment in international markets, cross-currency funding, and remittance / regulatory risk. Because BPI’s deposit franchise is primarily a peso-denominated domestic base, USD senior bonds need to be assessed separately in terms of foreign-currency assets and liabilities, foreign-currency liquidity, hedging, foreign-currency earnings, and the maturity ladder. This report has not completed that detailed confirmation.

The relationship with Ayala is also easily misunderstood in a structural assessment for bondholders. BPI has a deep historical relationship with the Ayala group, but within the scope confirmed in this report, there is no basis for assuming an explicit guarantee by Ayala Corporation for BPI bonds. Therefore, Ayala should not be treated as a guarantor, a government-related sponsor, or a sovereign support substitute. The Ayala identity may contribute to governance, brand, customer relationships, and confidence in domestic capital markets, but the source of debt repayment is BPI’s own banking business and balance sheet.

Regarding security class, what has been primarily confirmed at this point is senior unsecured debt. If BPI has subordinated debt, Tier 2, AT1, or loss-absorbing securities, those require a different risk assessment from senior bonds. This report focuses on issuer credit and senior debt and does not review all individual bond terms. Before investing in a specific ISIN, investors should check the offering circular, pricing supplement, governing law, payment ranking, tax, acceleration, cross-default, regulatory redemption / loss absorption, listing market, clearing, and currency hedging.

The practical interpretation for bondholders is that BPI senior bonds are “investment-grade bank bonds exposed to issuer credit of a leading Philippine bank,” and the core of the investment judgment lies in BPI’s deposit base, asset quality, regulatory capital, foreign-currency liquidity, and linkage to the Philippine sovereign. Market spreads, prices, OAS, and same-tenor bond comparisons have not been confirmed in this report, so no specific rich / cheap judgment is made.

6. Capital Structure, Liquidity and Funding

BPI’s capital structure, liquidity, and funding are the most important parts of issuer credit. For a bank, more decisive for bondholders than strong earnings are whether deposits remain, whether short-term funding does not tighten, and whether capital ratios can absorb credit costs and RWA growth. BPI is a deposit-led bank, which is a clear strength. At the same time, the rising loan-to-deposit ratio, the existence of foreign-currency bonds, and the decline in NPL coverage are reasons to continue checking liquidity and capital headroom.

The deposit composition at end-2025 was demand deposits of PHP432.0bn, savings deposits of PHP1,291.0bn, and time deposits of PHP1,115.6bn, for total deposits of PHP2,838.5bn. CASA, combining demand and savings deposits, was roughly PHP1.72tn, and the company release showed a CASA ratio of 60.7% at end-2025. A high CASA ratio is positive for funding costs and deposit stickiness. However, time deposits are also large, and deposit costs are repriced when the interest-rate environment changes.

Deposits are growing, but loans are growing faster. Deposits increased from PHP2.30tn at end-2023 to PHP2.61tn at end-2024 and PHP2.84tn at end-2025. Over the same period, gross loans increased from PHP1.94tn to PHP2.29tn and PHP2.62tn. The loan-to-deposit ratio rose from 82.0% to 85.6% and 90.4%, and reached 91.95% in 1Q 2026. This indicates that BPI is allocating excess deposits more actively into loans. From a credit perspective, this supports profitability but gradually narrows the buffer against deposit outflows or deterioration in market funding conditions.

Liquidity assets also require careful interpretation. BPI’s liquid assets were PHP318.3bn at end-2025, down from PHP350.4bn at end-2024. Meanwhile, treasury securities were PHP723.8bn, up from PHP658.6bn at end-2024. Looking only at liquid assets suggests a decline, but actual liquidity cannot be assessed without considering investment securities, eligible collateral, central bank availability, maturities, valuation gains and losses, and currency. This report has not confirmed LCR, NSFR, or currency-by-currency liquidity, and this remains an unconfirmed item.

Market funding is a supplementary funding source for BPI. Bills payable and other borrowed funds were PHP223.4bn at end-2025, up from PHP163.2bn at end-2024. The 2025 financial statement notes show USD 400mn senior unsecured bonds due 2029, USD 500mn senior unsecured bonds due 2030, USD 300mn senior unsecured bonds due 2035, and a USD 250mn green bond private placement subscribed by IFC. The capital markets issuance page also confirms BPI SIGLA Bonds due 2028 and BPI SINAG Bonds due 2026 as domestic peso bonds.

The main market funding instruments are as follows.

The 2026 maturities include PHP40bn of BPI SINAG Bonds due 2026 and the USD250mn IFC private placement green bond expected to mature on August 25, 2026. Relative to BPI’s end-2025 liquid assets of PHP318.3bn, treasury securities of PHP723.8bn, and deposits of PHP2.84tn, these appear to be manageable for the issuer as a whole. However, the specific funding sources for repayment / refinancing, foreign-currency liquidity, LCR / NSFR, and maturity ladder have not been confirmed. In particular, because the IFC private placement bond is USD-denominated, investors need to check not only the depth of peso deposits but also foreign-currency liquidity and bilateral / international-market refinancing capacity.

The presence of foreign-currency bonds is a positive indicator of BPI’s market access. The ability to issue a USD 500mn five-year bond and a USD 300mn 10-year bond in 2025 indicates a degree of confidence from international investors. At the same time, bank foreign-currency bonds cannot be fully explained by a peso deposit franchise alone. Foreign-currency liquidity, foreign-currency assets, derivative hedges, remittance regulations, US dollar rates, the Philippine sovereign’s foreign-currency rating, and international investors’ demand for emerging-market bank bonds all matter. BPI’s issuer credit is strong, but USD senior bond investors should assess foreign-currency liquidity separately.

On capital, BPI is increasing shareholder equity through retained earnings. Equity attributable to shareholders rose from PHP357.2bn at end-2023 to PHP430.5bn at end-2024 and PHP476.6bn at end-2025. The CET1 ratio fell from 15.29% in 2023 to 13.79% in 2024, then improved slightly to 13.94% in 2025. CAR was 16.18% in 2023, 14.49% in 2024, and 14.75% in 2025. This report has not fully confirmed the detailed changes in RWA, but given loan expansion and growth in consumer and SME lending, RWA growth may affect capital ratios.

Dividends also need to be incorporated into capital assessment. BPI paid PHP23.0bn in cash dividends to common shareholders in 2025. As long as earnings are sufficient, dividends are not a problem, but for bond investors, dividends are always a trade-off with capital retention. In a phase of rising credit costs, increasing RWA, and rising loan-to-deposit ratio, how much retained earnings are left in capital becomes important. BPI’s ROE is high, so capital generation is strong, but if provisions and growth investment continue, the conservatism of dividend policy should be confirmed.

Overall, BPI is a bank with multiple defensive lines supporting issuer credit through its deposit base and earnings capacity. However, the combination of a rising loan-to-deposit ratio, foreign-currency bonds, declining NPL coverage, and rapid growth in non-institutional loans means that headroom is not unlimited. In the base case, BPI is expected to maintain capital market access and fund itself primarily through deposits. In a credit stress scenario, however, slower loan growth, deposit competition, higher funding costs, and wider foreign-currency bond spreads could all affect the bank at the same time.

7. Rating Agency View

BPI’s official credit ratings page shows S&P’s long-term issuer credit rating as BBB+, outlook Stable, with a report date of September 2025. Moody’s is disclosed as Baa2, outlook Stable, with a report date of May 2025. BPI states on the same page that its credit ratings are at the same level as the Philippine sovereign rating. The important point is that BPI’s ratings are closely linked not only to the bank’s stand-alone strength, but also to the Philippine banking sector, sovereign constraints, the domestic economy, and the regulatory environment.

In S&P’s past public materials, BPI was assessed positively for its strong domestic market position, good competitive position, strong capital, broad branch network, and depositor confidence, while also noting that asset quality could deteriorate modestly if the bank expanded into higher-yielding and riskier consumer and SME portfolios. S&P’s 2025 component score table also showed Bank of the Philippine Islands as BBB+ / Stable, with business position and capital / earnings strong, risk position adequate, and funding / liquidity also assessed. These are broadly consistent with BPI’s current credit issues.

For Moody’s, BPI’s official page shows Baa2 / Stable. Based on media reports, Moody’s affirmed the long- and short-term deposit ratings and BCA of major Philippine banks including BPI in May 2025, citing stable profitability, capital, and liquidity. At the same time, media reports also indicated Moody’s view that linkage to the Philippine sovereign rating constrains upside. Because the full primary release was not fully reviewed at the time this report was prepared, Moody’s detailed triggers remain pending items.

For Fitch, this report confirmed a redistributed article stating that Fitch upgraded BPI’s Viability Rating to bbb- in March 2025 and affirmed the Long-Term IDR at BBB- / Stable. This was described as reflecting improvement in the operating environment of the Philippine banking sector and BPI’s franchise as a leading bank. However, because BPI’s official credit ratings page did not show the latest Fitch entry at the time this report was prepared, this rating analysis uses S&P and Moody’s as the main references and treats Fitch as supplementary information.

Rating agency views should not be used as a substitute for this report’s credit judgment. Ratings are useful external confirmation, but the issues investors need to assess are more specific. The fact that S&P and Moody’s view BPI as investment grade indicates that deposits, capital, earnings, and its status as a leading domestic bank are being recognized. At the same time, rapid growth in non-institutional loans, declining NPL coverage, linkage to the Philippine sovereign, and foreign-currency bond market access are not issues that can be ignored simply because the rating outlook is Stable.

The ratings can be organized by issuer credit and security class as follows.

The practical rating interpretation is that BPI is an investment-grade leading Philippine bank, but not a global bank credit that is fully independent of sovereign and domestic banking-sector constraints. BPI’s rating is high because its domestic franchise, deposits, capital, and earnings are strong, not because there is a government guarantee. Therefore, ratings need to be read by separating stand-alone bank credit, sovereign constraints, the existence or absence of government support, and security class.

8. Credit Positioning

BPI’s credit positioning is easiest to understand along three comparison axes. The first is its position among major Philippine banks, the second is its position among investment-grade banks in emerging Asia, and the third is the positioning of senior bonds versus other security classes within BPI. Market spreads and prices have not been confirmed in this report, so the relative assessment here is qualitative and based on fundamentals.

Among major Philippine banks, BPI is one of the leading private-sector banks and is not a weak peripheral bank. It has scale, deposits, brand, wealth, corporate and retail customers, investment-grade ratings, and access to the international USD bond market. There are banks larger than BPI, but BPI is sufficiently important within the Philippine banking system and has high recognition among domestic depositors, corporate customers, and investors. Therefore, its basic positioning as exposure to a leading Philippine bank is strong.

However, it is premature to treat BPI simply as a “low-risk bank.” The NPL ratio was 2.42% and the NPL coverage ratio was 87.15% in 1Q 2026, while non-institutional loans showed high growth. Compared with the Philippine banking system overall, BPI’s NPL ratio may still look favorable, but BPI’s own time series shows a direction in asset quality that needs monitoring. Being a leading bank increases loss-absorption capacity, but it does not remove the risk that changes in the loan mix will push up credit costs.

Compared with emerging Asian banks, BPI is a bank with a strong domestic franchise and high profitability, while being subject to country, currency, and sovereign constraints. ROE in the mid-14% range, ROA of about 2%, and NIM in the mid-4% range look high compared with developed-market banks. However, high margins at emerging-market banks reflect domestic interest-rate levels, lending risk, economic growth, inflation, currency, and the regulatory environment. BPI’s high profitability supports credit strength, but it also indicates sensitivity to the Philippine domestic credit cycle.

Within the same rating range, BPI is valued for profitability and franchise strength, while investors need to remain aware of sovereign constraints, the foreign-currency bond market, credit costs, capital headroom, and limitations in liquidity disclosure. BPI’s official ratings are close to the Philippine sovereign rating, so even if BPI’s stand-alone performance is strong, a deterioration in the sovereign rating could affect foreign-currency bond valuation and ratings. Conversely, if stand-alone asset quality deteriorates, issuer credit would be pressured even if the sovereign is unchanged.

By security class, BPI’s senior unsecured bonds are the most direct exposure to issuer credit. The market debt clearly confirmed at this stage is mainly senior debt, and this report has not conducted a detailed review of subordinated debt or loss-absorbing securities. The credit support for senior bonds comes from deposits, capital, pre-provision profit, regulatory supervision, and investment-grade ratings. At the same time, USD senior bond investors need to assess foreign-currency liquidity and international market access in addition to the domestic credit strength supported by the peso deposit base.

As a relative assessment without using market prices, BPI has a degree of defensiveness as a “senior bond credit of a leading private-sector Philippine bank,” but it is too early to downplay growth in consumer / SME lending and declining coverage. Compared with weak non-banks or small and medium-sized banks, it is clearly stronger in terms of deposits and capital. At the same time, it should not be placed on the same footing as larger global banks or developed-market banks with lower credit costs and more extensive liquidity disclosure. BPI’s relative value depends not on the spread level alone, but on how much required yield reflects the defensive strength of a leading bank relative to Philippine sovereign and asset-quality risk.

The positive case for BPI rests on its domestic deposit franchise, earnings capacity, NIM, wealth and fee income, investment-grade ratings, capital ratios, and international market access. The cautious case rests on high growth in non-institutional loans, rising NPL ratio, declining coverage ratio, rising loan-to-deposit ratio, unconfirmed details of foreign-currency bond liquidity, and linkage to the Philippine sovereign. Maintaining this two-sided view is important in BPI credit analysis.

9. Key Credit Strengths and Constraints

BPI’s first major credit strength is its deposit franchise as a leading domestic bank. Deposits were PHP2.84tn at end-2025, exceeding loans. The CASA ratio is also disclosed to be in the 60% range, and branches, ATMs, agency banking, and digital channels support customer touchpoints. In bank credit, the quantity and stickiness of deposits are the most important defensive line. Even when market funding becomes difficult, the bank can gain time if deposits remain.

The second strength is earnings capacity. In 2025, net interest income was PHP148.0bn, total revenues were PHP195.3bn, and pre-provision profit was PHP103.2bn. ROE was 14.5% and ROA was about 2.0%, indicating that the bank maintains high profitability. The ability to absorb higher credit costs through pre-provision profit is important for senior bondholders.

The third strength is the diversity of the business platform. BPI has corporate lending, consumer lending, SMEs, cards, housing, auto, wealth, insurance, investment banking, securities, foreign exchange, and treasury operations. BPI Wealth’s AUM and the growth in non-interest income can be valued as revenue sources that are not dependent only on loan spreads. Some revenues are, of course, affected by market conditions, but the lack of dependence on a single product or single large borrower is positive.

The fourth strength is investment-grade ratings and market access. BPI has disclosed ratings of S&P BBB+ / Stable and Moody’s Baa2 / Stable and has issued both domestic peso bonds and US dollar senior bonds. This indicates that domestic and international investors treat BPI as a bank issuer. Especially for senior debt, ratings and market access directly affect refinancing capacity.

The first constraint, however, is the direction of asset quality. The NPL ratio rose from 1.84% in 2023 to 2.13% in 2024, 2.18% in 2025, and 2.42% in 1Q 2026. It is not yet at a dangerous level, but the upward direction cannot be denied. Given that the areas BPI is expanding are consumer, SME, cards, and personal loans, asset quality is the most important monitoring item going forward.

The second constraint is the decline in NPL coverage. Coverage fell from 156.1% in 2023 to 87.15% in 1Q 2026. Whether this can be explained by collateral and write-off policy, or whether it indicates room for future provisions, requires confirmation through detailed financial statements. As credit investors, one should not judge only by the NPL ratio while ignoring the decline in coverage.

The third constraint is the rising loan-to-deposit ratio. The ratio has risen to the low-90% range, with loan growth outpacing deposit growth. This is positive for profitability, but is a neutral to somewhat cautious signal for liquidity headroom. If deposit competition intensifies, funding costs rise, and foreign-currency bond spreads widen, BPI’s profitability and liquidity could be pressured at the same time.

The fourth constraint is dependence on the sovereign, currency, and institutional framework. BPI is a domestic Philippine bank and is affected by the domestic economy, BSP regulation, the Philippine sovereign rating, peso and dollar markets, and emerging-market risk appetite among overseas investors. Even if BPI’s own operations are strong, a deterioration in the sovereign rating or domestic financial environment could worsen the valuation and issuance terms of its foreign-currency senior bonds.

The fifth constraint is that individual bond terms have not been confirmed. This report focuses primarily on issuer credit and has not examined the offering circulars, pricing supplements, governing law, tax, cross-default, acceleration, regulatory treatment, or individual terms of USD notes or peso bonds. The fact that BPI is investment grade as an issuer does not mean that the risks of all individual bonds are identical.

In summary, BPI has strong underlying capacity as a leading bank, while the quality of loan growth is now at the stage that needs verification. The current credit strength is supported by deposits, earnings, capital, and market access. The factors that could change the current view are NPLs, coverage, credit costs, the loan-to-deposit ratio, foreign-currency liquidity, and rating actions.

10. Downside Scenarios and Monitoring Triggers

BPI’s realistic downside scenario is more likely to begin with higher credit costs after loan growth than with sudden deposit outflows. In particular, the scenario would involve rising delinquencies in non-institutional loans, Business Banking, cards, personal loans, auto and motorcycle loans, and housing loans, followed by a higher NPL ratio and a further decline in coverage. In that case, even if pre-provision profit remains substantial, net income growth would slow, internal capital generation would weaken, and pressure on the CET1 ratio would increase.

The first monitoring indicator is the combination of the NPL ratio and coverage ratio. If the NPL ratio rises but coverage remains sufficiently high, loss-absorption capacity is preserved. Conversely, if the NPL ratio rises and the coverage ratio falls at the same time, the risk of additional future provisions increases. As of 1Q 2026, the NPL ratio was 2.42% and the coverage ratio was 87.15%, which is precisely the combination that should be monitored.

The second monitoring indicator is the ratio of provision expense to pre-provision profit. In 2025, provisions were PHP17.8bn and pre-provision profit was PHP103.2bn, indicating ample absorption capacity. However, if the 1Q 2026 provision level of PHP5.5bn continues, annual provisions could exceed 2025 levels. If provisions increase while revenues also grow, the issue is limited, but if revenue slows in an economic downturn, the effect on net income and capital generation becomes larger.

The third monitoring indicator is deposit growth and the loan-to-deposit ratio. If the loan-to-deposit ratio approaches 95%, deposit growth slows, and the share of time deposits or market funding increases, BPI’s liquidity and funding costs are more likely to deteriorate. Especially when foreign-currency bond refinancing approaches, investors need to confirm not only the strength of peso deposits but also foreign-currency liquidity and international market access.

The fourth monitoring indicator is the CET1 ratio and RWA growth. The CET1 ratio of 13.94% is above the regulatory minimum based on company disclosure, but the effective headroom including the capital conservation buffer, D-SIB buffer, and any individual additional requirements has not been confirmed. If consumer and SME lending grows, RWA increases, provisions rise, and dividends continue, capital ratios may decline. BPI’s high ROE supports internal capital generation, but for a bank with fast loan growth, capital needs can increase ahead of earnings even when profits are being generated.

The fifth monitoring indicator is rating agency action. Changes in outlook by S&P or Moody’s, changes in the Philippine sovereign rating, and deterioration in the banking-sector outlook directly affect BPI’s foreign-currency bond valuation. Even if BPI’s stand-alone performance is stable, deterioration in the sovereign or sector outlook could widen the required spread for international investors.

The sixth monitoring indicator is operational risk, cyber risk, compliance, and consumer protection. BPI is expanding digital transactions, agency banking, cards, wealth, and insurance. These broaden the customer base, but also increase risks related to system failures, fraud, cyberattacks, sales suitability, data protection, and agent management. In bank credit, these non-financial risks can rapidly affect depositor confidence and regulatory response.

A practical monitoring checklist is as follows.

The current downside scenario is not that BPI is heading toward short-term payment failure. The more realistic scenario is that after loan growth, NPLs and provisions increase, earnings growth slows, capital headroom is gradually eroded, and ratings or market spreads come under pressure. This type of deterioration appears slowly quarter by quarter, so investors should continue to monitor the direction of NPLs, coverage, the loan-to-deposit ratio, and CET1 rather than focusing only on headline net income.

11. Credit View and Monitoring Focus

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.

On capital and liquidity, CET1 of 13.94% and CAR of around 14.8% are above regulatory minimums based on company disclosure and support issuer credit, but effective headroom including the capital conservation buffer, D-SIB buffer, and any individual additional requirements needs further confirmation. At the same time, the loan-to-deposit ratio has risen to the low-90% range, indicating that loan growth is using deposit headroom. BPI’s funding is deposit-led, but it also issues US dollar senior bonds, so foreign-currency liquidity and international market access should be assessed separately. Strong peso deposits and low refinancing / liquidity risk for USD bonds are not the same thing.

On ratings, S&P BBB+ / Stable and Moody’s Baa2 / Stable support issuer credit. However, the ratings reflect not only BPI’s stand-alone strength but also Philippine sovereign and banking-sector constraints. It would be inappropriate to treat BPI as if it had a government guarantee or an Ayala guarantee. BPI’s credit strength should be judged based on its regulated banking franchise and its own balance sheet.

Using language close to an investment view, BPI senior bonds can remain on the monitoring list as one of the higher-quality issuers within Philippine bank risk. However, because live spreads have not been checked, this report does not judge whether the bonds are cheap or rich. If market levels are checked additionally, investors should compare BPI with other leading Philippine banks, similarly rated Asian banks, and same-tenor USD senior bonds, and assess how far BPI-specific NPL coverage decline and non-institutional loan growth are reflected in required yields or spread valuation.

12. Short Summary & Conclusion

Bank of the Philippine Islands is a leading private-sector Philippine bank with a deposit base, earnings capacity, wealth business, and investment-grade ratings. Senior issuer credit currently maintains investment-grade-like credit strength, but from 2025 to 1Q 2026, the NPL ratio has risen and NPL coverage has declined, so the high growth in consumer, SME, and Business Banking lending needs to be monitored carefully. This is not an acute credit-distress case at present, but rather a credit where investors should check quarterly how far a strong banking franchise can absorb rising credit costs.

13. Sources

Company and primary sources

• Bank of the Philippine Islands, 2025 Integrated Report, covering January 1 to December 31, 2025.
• Bank of the Philippine Islands, Press Release, BPI caps 2025 with P66.62 billion net income, up 7.4%, dated February 2, 2026.
• Bank of the Philippine Islands, Press Release, BPI with net income of PHP 16.9 billion for 1Q 2026, dated April 20, 2026.
• Bank of the Philippine Islands, Investor Relations, Financial Highlights.
• Bank of the Philippine Islands, Investor Relations, Financial Statements.
• Bank of the Philippine Islands, Investor Relations, Capital Market Issuances.
• Bank of the Philippine Islands, Investor Relations, Credit Ratings.
• Bank of the Philippine Islands, Investor Relations, Shareholder Information, Security Information and Stock Valuation.
• Bank of the Philippine Islands, 4Q and FY2025 Investor Presentation Deck, used for 2025 year-end loan portfolio composition.

Rating and sector sources

• S&P Global Ratings, public historical rating article for Bank of the Philippine Islands and October 2025 component score table where publicly available.
• BusinessWorld reporting on Moody's May 2025 Philippine major-bank rating actions; primary Moody's full report not fully reviewed.
• MarketScreener / Fitch redistributed release, Fitch Upgrades Bank of the Philippine Islands' VR to 'bbb-'; Affirms IDR at 'BBB-'; Stable, dated March 12, 2025; primary Fitch page not fully reviewed.
• GMA News Online reporting, citing Bangko Sentral ng Pilipinas data on the Philippine financial system as of end-2025, used only for broad sector context.
• Bangko Sentral ng Pilipinas public pages on risk-based capital adequacy and domestic systemically important banks, used only to frame regulatory capital concepts; BPI-specific buffers and individual requirements not confirmed.

Internal working materials referenced

• issuer_summary/issuers/bank_of_the_philippine_islands/working/bank_of_the_philippine_islands_20260513_writing_plan.md
• issuer_summary/issuers/bank_of_the_philippine_islands/data/bank_of_the_philippine_islands_key_metrics_20260513.json

Unverified or pending items

• Formal SEC 17-Q for 1Q 2026 or detailed consolidated quarterly financial statements.
• LCR, NSFR, currency-by-currency liquidity, foreign-currency assets and liabilities, and natural hedges or hedging policy for USD bonds.
• Offering circulars / pricing supplements, governing law, tax, acceleration, cross-default, regulatory treatment, and individual terms for USD senior notes and domestic peso bonds.
• BSP minimum capital requirement for BPI, capital conservation buffer, D-SIB buffer, and other individual additional requirements.
• Repayment / refinancing funding sources, LCR / NSFR, and maturity ladder for the BPI SINAG Bonds and IFC private placement green bond maturing in 2026.
• A fully like-for-like comparison table with BDO, Metrobank, and the Philippine banking system.
• Live bond prices, spreads, OAS, Z-spreads, CDS, and relative value versus same-tenor bonds.
• Latest primary Fitch source text and detailed upgrade / downgrade triggers from each rating agency.