MANILA (UPDATED) —  Fitch Ratings has upgraded Land Bank of the Philippines' viability rating to 'bb+' from 'bb'.

In a statement, the ratings agency said Landbank's viability rating improved because of the upward revision in the Philippines' banking sector operating environment score to 'bbb-'/stable from 'bb+'/stable.  

Fitch also said it considered Landbank's improving capital buffer, as it expects better profitability because of lower credit costs. 

"[Landbank]'s operating profitability was affected by large provisions in 2024, but credit costs are likely to decline this year amid a resilient economy and falling interest rates," the ratings firm said.

The ratings agency noted that the state lender is resolving the problem of non-performing loans and is now operating in a resilient environment.

"We expect the bank's NPL ratio to improve in 2025 amid a supportive economic environment and as it ramps up efforts to resolve problematic loans," Fitch said.

Fitch also kept Landbank's long-term local- and foreign-currency issuer default ratings (IDRs) at 'BBB'. Fitch said this reflects their belief that the state is likely to support the bank in times of need. 

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Fitch also said it expects the state-owned lender's core capitalization to improve, as increasing capital generation is likely to surpass risk-weighted asset growth.

For her part, Landbank president and chief executive officer Lynette Ortiz said the ratings upgrade is a testament to the bank's sound financial foundation and resilience.

"With a solid capital base and an improving profitability outlook, we are well positioned to drive stronger financial performance while deepening our commitment to agriculture and other key economic sectors that fuel national growth,” she said.