“The corporate credit rating for the Pag-IBIG Fund (Home Development Mutual Fund) is PRS Aaa minus (corp.),” PhilRatings announced. A corporate credit rating of PRS Aaa means that the Pag-IBIG Fund has a “VERY STRONG capacity to meet its financial commitments relative to that of other Philippine corporates.”
PRS Aaa is the highest possible rating on PhilRatings’ corporate credit rating scale. A PRS Aaa rating, however, can be qualified further by a minus to indicate an obligor’s relative position for that particular rating grade. It is worth noting that the Pag-IBIG Fund is not required to obtain a credit rating for any specific purpose at the moment. It is to the institution’s credit that it has undergone the rating process for greater transparency, disclosure, and to promote good governance.
In assigning the rating, PhilRatings focused on the Pag-IBIG Fund’s performance as a consistently profitable company, with a fairly well managed investment portfolio and with very much assured liquidity to meet all of its obligations to members and creditors alike. The rating also takes into account the guarantee afforded by the Philippine government over members’ contributions; its strategic role in the execution of government policy to promote savings and to provide shelter; and the favorable regulations under which the Fund has been constituted, not the least of which is the mandatory nature of contributions from eligible members. PhilRatings, however, recognizes that steps will continuously have to be taken by the Fund to improve its asset quality in relation to its lending portfolio to boost the Fund’s profitability further. PhilRatings likewise views favorably steps being taken to put in place a fully integrated data and internal business process system to allow the Pag-IBIG Fund to deliver services to its members more efficiently and effectively, as well as measures taken to amend the Fund’s charter. How such changes progress and are implemented will be followed closely by PhilRatings.
The Pag-IBIG Fund has a solid base of 5.7 million members (as of 2004). Members’ contributions to assets ratio was at 77.6% as of May 31, 2005. The Fund’s earnings rose by 23% to P6.5 billion in 2004. Return on average assets was at 4.2% for the same period. As of May 31, 2005, investments of the Fund stood at P48.7 billion, primarily consisting of Treasury Notes/Bonds and Time and Special Savings Deposits. Projected claims in 2005 total P8.85 billion versus projected collections of P37.54 billion.