Issuer Summary: Development Bank of the Philippines

Report date: 2026-05-18
Issuer: Development Bank of the Philippines
Ticker: DEVPHI
Relevant bond issuer: Development Bank of the Philippines
Bond structure reference: DBP senior unsecured Philippine peso bonds and any future senior unsecured or foreign-currency notes, subject to final terms and explicit guarantee language

1. Business Snapshot and Recent Developments

Development Bank of the Philippines (“DBP”) is a government-owned development bank wholly owned and controlled by the Philippine government. It should be analysed less as an ordinary private-sector commercial bank and more as a policy bank that provides financial support for the Philippines’ infrastructure, social development, environmental, and MSME agendas. In its 2024 Annual and Sustainability Report, DBP is positioned as the 10th-largest bank in the Philippines by total assets and as the Philippines’ infrastructure bank. Since DBP obtained an expanded commercial banking licence in 1995 and operates as a universal bank, its credit analysis also needs to cover conventional banking factors such as deposits, loans, treasury operations, branch network, and bond issuance. However, the starting point for credit analysis is not whether DBP is a high-return bank, but how far the expectation of government support for DBP as a policy bank offsets the constraints in its standalone asset quality, capital, and liquidity.

As of 18 May 2026, the latest detailed annual document identified was the 2024 Annual and Sustainability Report published on DBP’s official website. The audited Annual and Sustainability Report for full-year 2025 had not been identified at the time of writing. Separately, the Published Balance Sheets as of end-December 2025 and end-September 2025 were identified on the official website, with the end-December 2025 version stated to have been posted on 23 February 2026. This report is therefore initial coverage based on a combination of the audited 2024 annual materials, the September and December 2025 quarterly Published Balance Sheets, the June 2025 Series 7 Final Pricing Supplement, the 2020 Bond Programme Offering Circular, and RA 8523.

There are three immediate credit issues. First, the ratings are clearly linked to sovereign support. Fitch was reported in April 2026 to have revised the outlooks on DBP and Land Bank of the Philippines (“LandBank”) to Negative from Stable, while affirming DBP’s Long-Term IDR at BBB. This should be read less as a sudden deterioration specific to DBP and more as a pass-through of the change in the Philippine sovereign outlook to government-owned banks. S&P Global Ratings also revised the outlook on DBP’s long-term issuer credit rating to Stable from Positive on 10 April 2026, while affirming the BBB+ long-term and A-2 short-term ratings. S&P explicitly states that DBP’s ratings move in tandem with the Philippine sovereign rating.

Second, DBP’s standalone banking metrics show constraints that cannot be ignored even when government support is assumed. In the consolidated Published Balance Sheet as of end-December 2025, total assets were PHP1.044trn, gross total loan portfolio was PHP662.6bn, and deposits were PHP800.2bn. The consolidated gross NPL ratio at end-December was 7.12%, improving from 8.66% at end-September, but still high compared with major private-sector Philippine banks. The gross NPL coverage ratio was 102.86%, and the net NPL coverage ratio was 87.68%. These were improvements from end-September, but asset-quality monitoring remains important for a policy bank.

Third, capital needs to be assessed on two layers. At end-December 2025, the consolidated CET1/Tier 1 ratio was 10.40% and CAR was 11.31% on the regulatory-relief-excluded basis shown in the Published Balance Sheet. By contrast, the notes to the same document show a CET1 ratio of 14.16% and CAR of 15.07% after including BSP regulatory relief. Compared with the consolidated CET1/Tier 1 ratio of 14.06% and CAR of 14.97% at end-2024, the relief-included basis has not deteriorated materially, but the relief-excluded basis calls for a much more cautious reading of capital headroom. In particular, while the bank exceeds the minimum CAR of 10.00% shown in the 2024 ASR, the effective headroom after including the 2.50% capital conservation buffer may have been largely consumed on a relief-excluded basis. This needs to be viewed together with the PHP25bn contribution to the Maharlika Investment Fund (“MIF”), loan growth, and the capital burden associated with DBP’s role as a policy bank.

DBP’s credit profile can be summarised as follows.

In one sentence, DBP is an issuer with strong support expectations as a policy bank of the Philippine government, but bondholders should not equate that support expectation with a direct guarantee from the Republic and should monitor NPLs, capital relief, deposit and bond funding, sovereign ratings, and specific bond terms at the same time.

2. Industry Position and Franchise Strength

DBP’s franchise should not be assessed solely by reference to private-sector bank metrics such as retail deposit share or consumer-finance earnings. Its strength lies in its ability, as a government-owned development bank, to allocate long-term policy-oriented funding to infrastructure, regional development, environmental projects, social services, and MSMEs, areas where private-sector banks alone may not provide sufficient financing. The 2024 Annual and Sustainability Report states that DBP has 148 full-service branches and branch lite units, many of which are located in underserved and unbanked areas. The at-a-glance section shows 133 branches, 15 branch lite units, one financial centre, and 989 ATMs. This indicates that DBP is not merely an urban wholesale bank, but a bank with interfaces to regional, public-sector, and development finance.

Within the Philippine banking sector, DBP should be viewed alongside LandBank as a government-owned universal bank. LandBank has a larger role in agriculture and rural finance, government-related deposits, and public-sector payments, while DBP is more focused on infrastructure, industry, local development, the environment, and social infrastructure. Fitch’s simultaneous outlook revision on DBP and LandBank in April 2026 indicates that the market views both institutions as core financial institutions used by the government to implement policy. DBP is smaller than LandBank, but its policy non-substitutability is important in connecting the Philippine government’s infrastructure, regional development, and industrial policies to the financial market.

The first franchise strength is DBP’s policy mandate and institutional proximity to the government. RA 8523 is an amending law that includes DBP’s authorised capital and government ownership framework, and assumes a structure in which DBP shares are subscribed by the national government. The governance framework provides for directors to be appointed by the President, and the Series 7 Final Pricing Supplement links DBP’s board appointment by the President to S&P’s support assessment. Government ownership, policy assignment, supervision, and the ability to adjust the balance sheet through capital and dividend policy as needed are central to the expectation of credit support for DBP.

The second strength is deposits and access to the domestic market. Consolidated deposits at end-December 2025 were PHP800.2bn, exceeding gross total loans of PHP662.6bn. This shows that although DBP is a policy bank, it is not a pure wholesale-funded institution without deposits. The consolidated LCR of 136.83% and NSFR of 115.70% at end-December 2025 also show some headroom in regulatory liquidity indicators. However, this report has not fully broken down deposit composition, the share of government-related deposits, maturity profile, or foreign-currency liquidity, so the deposit base should not be assessed too strongly.

The third strength is the policy visibility of development lending. The development loan portfolio totalled PHP507.87bn in 2024, led by infrastructure and logistics at PHP326.48bn. Social infrastructure and community development was PHP99.33bn, environment was PHP55.12bn, and MSMEs were PHP26.94bn. Through programmes such as FUSED, DBP supports power, transmission and distribution, renewable energy and efficiency, and local infrastructure. These activities are aligned with the government’s medium-term development strategy and raise DBP’s policy importance.

At the same time, franchise strength does not eliminate credit risk. Policy banks lend to sectors, long-tenor projects, regional projects, and projects with a high public-good element that commercial banks may be less willing to finance, and their asset quality may therefore appear weaker than that of major private-sector banks. In fact, the gross NPL ratio of 7.12% at end-December 2025 points to a constraint on the standalone balance sheet, separate from the strength of the supported rating. Being a government-owned bank increases the expectation of support when needed, but it also means that the bank is more exposed to policy burdens. DBP should not be analysed simplistically as “safe because the government is close”; it should be read as “more likely to be supported because the government is close, but also exposed to policy risk because the government is close.”

3. Segment Assessment and Development Role

DBP’s credit strength is difficult to assess using only the ordinary banking categories of corporate, retail, and treasury. As a development bank, its core function is the provision of long- and medium-term funding to policy-priority sectors. The 2024 development loan portfolio was as follows.

Infrastructure and logistics is the area that most strongly supports DBP’s credit-support expectation. DBP states that it was designated as the country’s infrastructure bank in 2017, and infrastructure and logistics loans increased to PHP326.4bn at end-2024. Under the FUSED Program, DBP had provided PHP70.95bn by end-2024 to support expansion of power supply, transmission and distribution, and power generation projects. Infrastructure is a policy objective that is difficult for the government to replace, and DBP’s role in supplying credit to this sector strengthens support expectations.

However, infrastructure lending also carries significant credit risk. Long-tenor projects are affected by construction delays, tariff regimes, demand forecasts, sponsor credit quality, the payment capacity of LGUs or government agencies, and exchange-rate and interest-rate volatility. Even if a project is socially necessary, weak repayment sources can still impair bank asset quality. DBP’s disclosures do not allow this report to fully extract NPLs in the infrastructure segment, the share of LGU lending, the share of government-guaranteed projects, or single-name large-exposure concentrations. This initial report therefore treats policy importance as positive, while leaving the credit risk of infrastructure lending as an item requiring further verification.

Social infrastructure and community development relates to healthcare, education, housing, water supply, and local public services. The 2024 ASR shows outputs such as hospital beds, classrooms, housing units, water supply, electric vehicles, and deposit account openings. Social infrastructure is highly aligned with government policy and reinforces DBP’s role. At the same time, profitability can be lower than in commercial lending, and local government or public-agency payment capacity, tariff collection, subsidies, and debt-assumption mechanisms become important. Bond investors should not conflate social relevance with credit quality.

Environment shows DBP’s alignment with sustainability and climate-related policy. Environmental lending may increase policy relevance and investor demand in areas such as renewable energy, efficiency, water and waste, and climate adaptation. However, an ESG label does not automatically strengthen repayment capacity. Credit risk is determined by project technology, operations, regulation, subsidies, offtake, foreign exchange, and construction costs. For bonds using DBP’s sustainable-finance framework, use of proceeds and impact reporting also matter, but the Offering Circular also cautions that ineligibility of sustainable projects or withdrawal of the Second Party Opinion would not necessarily constitute an event of default.

MSME lending shows DBP’s role in financial inclusion and regional development, but may be the most cyclical area from a standalone credit perspective. SMEs may be vulnerable to liquidity pressure, collateral constraints, customer concentration, higher interest rates, foreign exchange, and natural disasters, and delinquencies can emerge quickly in a slowdown. It remains unverified which segment contributed to the gross NPL ratio of 7.12% at end-December 2025. In the next update, sector-level NPLs, Stage 2 loans, restructurings, and the split among LGUs, GOCCs, and private-sector borrowers should be checked.

The segment assessment indicates that DBP’s business base is both “policy-important enough to generate support expectations” and “more exposed to asset-quality risk than a commercial bank on a standalone basis.” The policy mandate is both a credit enhancement and a credit constraint, and DBP analysis must retain this duality.

4. Financial Profile and Analysis

DBP’s financial profile showed some recovery in earnings and capital through 2024, and assets and loans expanded by end-2025, but asset quality and capital ratios require a cautious reading. Consolidated net income in 2024 was PHP7.41bn, while parent-bank net income was PHP7.27bn, which the ASR states was a record-high level for the parent bank. Consolidated net interest income was PHP26.45bn in 2024, and parent-bank net interest income was PHP26.44bn, with a parent-bank NIM of 3.10%. DBP is not an issuer that seeks high profitability as a policy bank, but it had some capacity to absorb credit costs through pre-provision earnings.

The key 2024 and end-December 2025 metrics are as follows. The September and December 2025 figures are from Published Balance Sheets and are not audited full-year 2025 earnings figures.

On earnings, 2024 showed improvement. Parent-bank net interest income rose 13% year on year to PHP26.43bn, and NIM was 3.10%. Higher interest income and lower interest expense contributed to pre-provision profit of PHP15.22bn. However, credit costs were heavy: allowance for credit losses was PHP7.15bn for the parent bank and PHP7.59bn on a consolidated basis. Given DBP’s role as a policy bank, a certain level of credit cost is not surprising, but profitability is materially affected by credit costs.

Asset quality is the main standalone constraint. The 2023 ASR showed a high gross NPL ratio of 7.37% on a consolidated basis and 7.19% for the parent bank. At end-September 2025, the consolidated ratio rose to 8.66%, before improving to 7.12% at end-December. The December improvement is positive, but the level remains high. DBP’s credit strength is strongly supplemented by government-support expectations, but persistently high NPLs would pressure earnings, capital, dividend and capital policy, and rating agencies’ standalone assessment. The next update should examine the source of new NPLs, recoveries, write-offs, restructurings, and sector-level NPLs.

Provision coverage improved at end-December 2025. The consolidated gross NPL coverage ratio rose from 91.74% at end-September to 102.86% at end-December, and the net NPL coverage ratio rose from 77.23% to 87.68%. This appears to have substantially remedied the weaker coverage at end-September. However, policy-bank loans may include long-tenor projects, public-sector projects, and exposures where collateral valuation is difficult, so recoverability should not be judged from the coverage ratio alone. Details on collateral type, government guarantees, LGU IRA/revenue, project cash flows, ODA-related guarantees, and FXRC are needed.

Capital looked adequate through end-2024, but the two-layer presentation became important in the end-2025 disclosures. According to DBP’s 2024 ASR, the BSP minimum standards are CET1 of 6.00%, Tier 1 of 7.50%, CAR of 10.00%, and leverage ratio of 5.00%, and a 2.50% capital conservation buffer is also shown. The consolidated CET1/Tier 1 ratio of 14.06% and CAR of 14.97% at end-2024 were comfortably above these standards. By contrast, in the Published Balance Sheet at end-December 2025, the consolidated CET1/Tier 1 ratio excluding relief was 10.40% and CAR was 11.31%, while the relief-included CET1 ratio was 14.16% and CAR was 15.07%. Investors should clearly distinguish this difference. Relief-excluded CAR is above the 10.00% minimum, but falls short of an effective 12.50% reference point including the 2.50% capital conservation buffer, and it is natural to read this as a state in which the buffer is being consumed. The relief-included figures look stable, but the relief-excluded numbers show the importance of capital policy.

The PHP25bn contribution to the MIF cannot be avoided in DBP’s credit analysis. In the 2024 ASR cash-flow statement, there was a PHP25bn contribution to the MIF in 2023 and zero in 2024. The Series 7 Final Pricing Supplement explains that the MIF contribution affected DBP’s capital, that a new DBP bill to increase authorised capital from PHP35bn to PHP300bn was progressing through Congress, that the government’s stake would be at least 70%, and that dividend relief requests related to 2023 and 2024 profits were either unapproved or under evaluation by the DOF. This shows that government support affects credit strength not merely as an abstract expectation, but through capital, dividend, and institutional design.

The provisional financial assessment is that DBP can be treated as an investment-grade government-owned bank on a supported basis, but asset quality and reliance on capital relief constrain the standalone profile. DBP generated profit in 2024, maintained good liquidity ratios at end-2025, and has a deposit base. At the same time, NPLs are high and relief-excluded capital ratios leave limited headroom. DBP’s credit should therefore be assessed primarily through government support and linkage to the sovereign rating, while still monitoring improvement in the standalone bank profile.

5. Structural Considerations for Bondholders

The most important structural issue for DBP bondholders is to distinguish government-support expectations from a direct payment obligation of the government. DBP is wholly government-owned, policy-important, and Fitch/S&P incorporate a high likelihood of government support into their ratings. However, unless explicitly stated in the relevant terms, ordinary DBP peso bonds are not direct, unconditional, and irrevocably guaranteed obligations of the Republic of the Philippines. This section checks the structure of ordinary peso bonds using the 2020 Bond Programme Offering Circular and the 2025 Series 7 Final Pricing Supplement as representative examples, and does not conclude that all DBP bonds, including foreign-currency bonds or future bonds, contain identical terms.

DBP’s 2020 PHP50bn Bond Programme Offering Circular makes this point quite clearly. The Circular states that the Bonds are direct, unconditional, unsecured, and unsubordinated obligations of DBP and rank pari passu with DBP’s other unsecured and unsubordinated peso-denominated obligations. At the same time, the Bonds are not deposits and are not insured by the Philippine Deposit Insurance Corporation (“PDIC”). It also expressly states that the Bonds are not guaranteed by the government, that the government is not an obligor of the Bonds, and that payments of interest and principal are not backed by the credit of the government. This means that DBP’s government ownership should not lead investors to treat the bonds as having the same legal claim as Philippine government bonds.

The June 2025 Series 7 Final Pricing Supplement shows the same basic structure. Series 7A consists of PHP3.457bn 5.8751% bonds due 2028, and Series 7B consists of PHP4.793bn 6.1454% bonds due 2030, for a total of PHP8.250bn fixed-rate bonds. They were issued under the expanded PHP150bn Bond Programme and are direct, unconditional, unsecured, and unsubordinated Philippine peso-denominated obligations of DBP, traded among Qualified Buyers on PDEx. The governing law for Series 7 is Philippine law, the trustee is Land Bank of the Philippines - Trust Banking Group, and the Issue Manager/Sole Arranger/Sole Bookrunner is China Bank Capital Corporation.

The main structural points in the Bond Programme and Series 7 are as follows.

This structure does not mean that DBP bonds should be viewed as weak. On the contrary, it is clear that government-support expectations are central to the ratings and market access. Fitch explained as of March 2025 that DBP’s Long-Term IDR was equalised with the sovereign, and S&P views government support for DBP as almost certain. The issue is that support expectations in ratings and the legal meaning of a contractual direct guarantee are different. Even if bond investors assess spreads or ratings near the sovereign, they should reflect in pricing the possibility that there may be no provision requiring the government to make direct payment upon default.

As bank debt, the relationship among depositors, general creditors, and bondholders also needs to be assessed. The Offering Circular states that the Bonds are not deposits and are not covered by PDIC insurance, while also stating that they are unsecured and unsubordinated obligations of DBP ranking pari passu with DBP’s other unsecured and unsubordinated peso-denominated obligations. Philippine banking regulation, BSP supervision, bank resolution, and statutory preferred claims in liquidation are more important than for ordinary corporate bonds. This report does not review the details of the resolution framework, so the structural analysis is limited to confirming the ranking of ordinary bonds and the boundary of government guarantees.

6. Capital Structure, Liquidity and Funding

DBP’s funding combines deposits, bills payable, bonds payable, ODA and borrowings, and other market-based funding. In the consolidated Published Balance Sheet at end-December 2025, deposits were PHP800.2bn, bills payable were PHP57.9bn, bonds payable-net was PHP36.7bn, total liabilities were PHP944.1bn, and equity was PHP99.5bn. Deposits are the largest funding source and exceed gross loans of PHP662.6bn. This indicates that although DBP is a policy bank, it is not a purely wholesale-funded institution and has a domestic banking funding base.

Liquidity ratios showed some headroom at end-2025. The consolidated LCR was 136.83% and NSFR was 115.70%, both down slightly from 142.03% and 115.96% at end-September, but still above 100%. On a parent-bank basis, LCR was 136.56% and NSFR was 115.74%. This indicates that, on regulatory indicators for short-term liquidity stress and stable funding, DBP was not in an immediate liquidity squeeze.

At the same time, the ROA/ROE shown in the September and December 2025 Published Balance Sheets are profitability metrics under that disclosure format and are not annual ROA/ROE calculated from audited FY2025 full-year earnings. This report uses them as supplementary indicators of direction, and the final assessment of 2025 full-year profitability should be rechecked in the FY2025 Annual and Sustainability Report.

There are also reasons not to assess liquidity too strongly. First, this report has not verified the share of government-related deposits, CASA/time deposit mix, maturity profile, or depositor concentration. The 2024 ASR explains that the parent bank’s deposit mix improved towards CASA, but end-2025 details have not yet been confirmed in an annual report. Second, because DBP expands its balance sheet through policy lending and bond issuance, reliance on market funding will increase if loan growth exceeds deposit growth. Third, foreign-currency borrowings and ODA-related debt involve issues around foreign exchange, hedging, DOF guarantees, and FXRC, and peso deposits alone are insufficient to assess foreign-currency liquidity.

The 2020 Offering Circular explained that the DOF provides repayment guarantees and Foreign Exchange Risk Cover for ODA loan obligations, while some foreign-currency debt is not covered by guarantees or FXRC. This information is old, but it has important implications for DBP’s funding structure. As a government-related bank, DBP has relatively good access to ODA and government-supported foreign-currency funding, but foreign-exchange risk and portions not covered by guarantees may still exist. The latest breakdown of foreign-currency debt, DOF guarantees, FXRC, and hedging as of end-2025 is unverified and should be checked in the next update.

In capital structure, the key issue is post-MIF capital restoration. The Series 7 Final Pricing Supplement explains that the new DBP bill would raise DBP’s authorised capital stock from PHP35bn to PHP300bn, that the government would hold at least 70%, and that the objective is to increase lending capacity for infrastructure, MSMEs, education, healthcare, and other areas. The Supplement summarises Fitch as viewing this as unlikely to have a significant near-term impact on the support assessment, as long as the government retains at least 70% ownership. This suggests that even if DBP moves from full government ownership to a framework allowing some private ownership, its support expectation as a policy bank would not disappear immediately.

However, investors still need to verify the realised amount and timing of capital strengthening. End-December 2025 relief-excluded capital ratios are thin, and the gap with relief-included ratios is large. The medium-term standalone credit strength of DBP will depend on whether capital headroom is restored through dividend relief, an increase in authorised capital, government capital injection, retained earnings, or RWA growth restraint. The support expectation for DBP as a policy bank is strong, but it should not be treated casually as a substitute for standalone capital.

7. Rating Agency View

Rating-agency views are essential in framing DBP’s credit analysis as a supported credit. Both Fitch and S&P assess DBP as a government-related bank with a strong relationship with the Philippine government. However, the latest outlooks have changed from the materials available as of 2025.

For Fitch, the Series 7 Final Pricing Supplement summarises a Fitch report dated 11 March 2025, stating that DBP’s Long-Term IDR was equalised with the Philippine sovereign, that there was a high likelihood of government support if needed, that the Government Support Rating was bbb, and that DBP’s role as a strategic infrastructure bank and 100% government ownership supported the support assessment. The same summary states that Fitch upgraded DBP’s Viability Rating to bb from bb-. This was explained as reflecting improvement in the Philippine banking sector’s operating environment score, some improvement in capital buffers, and the risks and benefits of DBP’s role as a government-related policy bank.

However, according to BusinessWorld reporting in April 2026, Fitch revised the outlooks on DBP and LandBank to Negative, while affirming DBP’s Long-Term IDR at BBB, Short-Term IDR at F2, and GSR at bbb. The report also stated that DBP’s standalone viability rating was affirmed at bb and then withdrawn as it was no longer relevant under Fitch’s rating framework. This report therefore treats the 2025 VR upgrade as historical context on DBP’s standalone assessment, while reading the latest Fitch analysis primarily through the supported rating and sovereign linkage.

For S&P, the Series 7 Final Pricing Supplement stated that S&P affirmed DBP’s Issuer Credit Rating at BBB+ on 26 November 2024 and revised the Outlook to Positive. This reflected DBP’s important role in the Philippines’ development agenda, its provision of infrastructure finance and support for underserved communities, its strong link with the government through 100% government ownership and a board appointed by the President, and the view that the rating moves in tandem with the sovereign.

Subsequently, on 10 April 2026, S&P revised the outlook on DBP’s long-term issuer credit rating to Stable from Positive, while affirming the BBB+ long-term and A-2 short-term ratings. S&P explained that this action followed a similar action on the Philippine sovereign rating, that DBP’s outlook reflects the outlook on the Philippines, and that DBP’s ratings move in tandem with the sovereign rating. It also explained that support from the Philippine government is almost certain and that DBP plays an important role as one of two state-owned universal banks in implementing the government’s medium-term development strategy.

The rating picture is as follows.

Rating-agency views are broadly consistent with this report’s credit view. DBP’s supported credit strength relies heavily on government-support expectations and sovereign credit. The high rating is not driven by wholly strong standalone NPL and capital metrics, but by the high likelihood that the government will support DBP as a policy bank. DBP bond downside risk therefore arises not only from deterioration in standalone NPLs, but also from the Philippine sovereign rating and outlook, government willingness to provide support, delivery of capital strengthening, and any decline in DBP’s policy role.

8. Credit Positioning

DBP’s credit position is easiest to understand by comparing it with the Philippine sovereign, LandBank, major private-sector Philippine banks, and policy financial institutions in other countries. First, relative to the Philippine sovereign, DBP is very close to the sovereign on a supported-credit basis, but its legal claim differs from a sovereign bond. Fitch and S&P link DBP to the sovereign, but the Offering Circular expressly states that DBP bonds are not government-guaranteed. Therefore, the direction of issuer credit is close to the sovereign, but the contractual obligor is DBP.

Compared with LandBank, both institutions are state-owned universal banks and both benefit from government support in Fitch/S&P assessments. LandBank is larger and plays a bigger role in government-related deposits, agriculture finance, and the public sector, while DBP is more clearly specialised in infrastructure and development finance. For investors, what matters is not only DBP’s standalone NPLs and capital, but also the extent to which the government treats LandBank and DBP as comparable policy institutions. Fitch’s simultaneous Negative outlook revision on both institutions in April 2026 shows that the ratings of both banks are materially linked to sovereign support.

Compared with private-sector Philippine banks, DBP is likely to be weaker on profitability and asset quality. Major private banks such as BPI typically have strong retail and corporate franchises, lower NPL ratios, and stronger profitability. By contrast, DBP’s end-2025 gross NPL ratio of 7.12%, ROA of 0.42%, and ROE of 4.17% are not strong standalone private-bank-style indicators. DBP’s support comes not from higher profitability than private banks, but from government ownership, policy mandate, and support expectations.

Compared with policy banks in other countries, the key common issue with institutions such as Korea Development Bank, Export-Import Bank of Thailand, and Sarana Multi Infrastruktur is the separation between government support and explicit guarantee boundaries. KDB has a very strong institutional link with the Korean government and a rating level close to the Korean sovereign. EXIMTH, as a Thai government-owned export credit agency, raises issues around differences between domestic and international ratings, and between government support and specific guarantees. SMI, as an Indonesian government-owned infrastructure finance company, also requires a distinction between government support and the terms of individual debt. DBP is similar: policy importance is strong, but not all liabilities should be treated as equivalent to government bonds.

The relative position is as follows.

This report has not checked market spreads, CDS, or individual bond yields. It therefore does not make a conclusion on investment appeal or relative value. When comparing DBP, investors should align government-guarantee status, currency, maturity, liquidity, tax treatment, and trading restrictions against Philippine government bonds, LandBank bonds, major Philippine private-bank bonds, and similarly rated Asian policy-bank bonds.

9. Key Credit Strengths and Constraints

DBP’s main credit strength is the expectation of government support. Full government ownership, its policy mandate as an infrastructure bank, its status as a state-owned universal bank, a board appointed by the President, and Fitch/S&P’s supported ratings provide a credit enhancement not available to ordinary private-sector banks. Even if DBP comes under temporary asset-quality or capital pressure, the government has a strong incentive to maintain it as a policy bank.

The second strength is the domestic deposit base and regulatory liquidity indicators. Deposits were PHP800.2bn on a consolidated basis at end-December 2025, exceeding gross loans. LCR of 136.83% and NSFR of 115.70% indicate that, at least on published regulatory measures, there is some headroom in short-term liquidity and stable funding. A deposit base makes DBP more stable than a purely market-funded policy financial institution.

The third strength is the direct link between DBP’s policy lending and the government’s development strategy. Development lending to infrastructure and logistics, social infrastructure, environment, and MSMEs is directly linked to the government’s growth, regional development, inclusion, and climate policies. The government has a clear reason to maintain DBP’s function, which underpins rating agencies’ strong incorporation of government support.

The largest constraint is asset quality. The gross NPL ratio of 7.12% at end-December 2025 is high even after improving from end-September. Given DBP’s structure as a policy bank taking risk in higher-risk areas, it is not appropriate to assume NPLs comparable to private-sector banks, but high NPLs affect earnings, capital, dividends, and the need for government support.

The second constraint is the two-layer capital profile. CAR in the 15% range including relief looks presentable, but excluding relief, consolidated CAR was 11.31% and parent-bank CAR was 11.22% at end-December 2025. Although these are above the BSP minimum CAR of 10.00%, they do not reach the 12.50% reference point including the 2.50% capital conservation buffer, and it is difficult to describe the buffer as thick given policy loan growth and persistently high NPLs. Government capital policy, dividend relief, and delivery of the new DBP bill are important.

The third constraint is the legal boundary of support for bondholders. Government-support expectations are strong, but the Bond Programme Offering Circular expressly states that the government is not the obligor of the Bonds and that the Bonds are not government-guaranteed. Bond investors should assess supported ratings while separately checking contractual guarantees, ranking, governing law, Events of Default, and liquidity constraints for each issue.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside for DBP is a downgrade of the Philippine sovereign or deterioration in the sovereign outlook. Because both Fitch and S&P link DBP strongly to the sovereign, a downgrade of the sovereign rating would likely lead to a downgrade of DBP’s supported rating. In particular, fiscal deterioration, lower growth, external-account deterioration, energy-price shocks, and concerns over political or policy continuity could affect the rating more than DBP’s standalone numbers.

The second downside is persistently high NPLs or a renewed increase. The NPL ratio improved at end-December 2025, but the 7% range remains high. If delinquencies or restructurings increase in infrastructure, LGU, public-interest projects, MSMEs, or environmental projects, provisions and credit costs could again pressure earnings. If the NPL ratio returns to the 8% range seen at end-September, coverage again falls below 100%, the net NPL ratio rises, or Stage 2 increases, the standalone credit view would weaken.

The third downside is delay in capital relief or capital strengthening. If relief-excluded CAR remains in the 11% range, RWA increases with loan growth, NPL provisions consume capital, and dividend relief or authorised-capital strengthening is delayed, DBP will find it more difficult to maintain policy lending. Government-support expectations are strong, but if the timing, form, and sufficiency of support are unclear, investors would assess DBP bonds more cautiously.

The fourth downside is a market repricing if misunderstanding of bond structure is corrected. If investors treat DBP bonds as effectively the same as government bonds, DBP bond spreads could widen relative to the sovereign if the absence of a guarantee in the Offering Circular, liquidity constraints, Qualified Buyer trading restrictions, and the fact that the government is not the obligor are re-recognised. This would be a relative-value adjustment reflecting contractual claims, not necessarily a default concern.

The main monitoring items are as follows.

11. Credit View and Monitoring Focus

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.

For bond investors, DBP should be described as “DBP debt with strong government-support expectations”, not as “Republic of the Philippines guaranteed debt” without verification. The Offering Circular expressly states that there is no government guarantee, and unless final terms for the relevant bond are checked, a direct claim on the Republic cannot be assumed. Investors buying or holding DBP bonds therefore need to assess the sovereign rating, comparison with LandBank, DBP’s standalone NPLs/capital, bond terms, liquidity, and currency together.

Future updates should prioritise the FY2025 audited Annual and Sustainability Report, the Published Balance Sheet as of end-March 2026, the full primary Fitch/S&P reports, progress on the new DBP bill and capital strengthening, and guarantee language in outstanding foreign-currency and peso bonds. Once these items are available, the gap between DBP’s supported credit and standalone credit, relative positioning of bond spreads, and comparison with LandBank can be assessed more precisely.

12. Short Summary & Conclusion

Development Bank of the Philippines is a policy and development bank wholly owned by the Philippine government, and its role as an infrastructure bank and the expectation of government support are central to its credit strength. At the same time, the gross NPL ratio of 7.12% at end-December 2025 and CAR of 11.31% excluding relief are constraints on standalone credit strength, and investors need to verify capital policy and the sustainability of NPL improvement. DBP debt is treated as sovereign-adjacent on a supported basis, but ordinary peso bonds are not government-guaranteed, so investment analysis should clearly separate individual bond terms from the Philippine sovereign rating.

Sources

Primary Company Sources

Rating And Market Sources

Unverified / Pending Items

1. FY2025 audited Annual and Sustainability Report was not found on DBP official pages during initial coverage.
2. Published Balance Sheet as of March 31, 2026 was not listed on the DBP Published Balance Sheet page as of 2026-05-18.
3. Fitch's full 2026 rating action commentary was not accessed directly; this report uses public media reporting and DBP/PDS documents.
4. S&P 2026 rating action was confirmed on S&P's official regulatory page, but full RatingsDirect-style detail beyond the public/regulatory text was not separately downloaded.
5. Individual terms for all outstanding DBP bonds were not reviewed. Series 7 and the base Bond Programme were checked as representative sources for ordinary DBP peso bond structure.
6. Sector-by-sector NPL, LGU/GOCC/private borrower split, large exposure concentration, ODA guarantee/FXRC details, and foreign-currency liquidity profile remain pending.