THE Bangko Sentral ng Pilipinas (BSP) assured the public on Friday that the Philippine banks were capable of withstanding economic shocks.
The statement was in response to a new Fitch Ratings report where the debt watcher said it “believes recent economic challenges in the Philippines are likely to drive higher credit impairments and lower bank profitability in the near term.”
Earlier this month, Fitch lowered the Philippine banking sector’s outlook to “deteriorating” from “neutral,” warning that rising inflation and slower economic growth stemming from the US-Iran war threatened profitability and asset quality.
The BSP, however, said: “Philippine banks remain well positioned to withstand potential shocks, supported by ample liquidity, adequate capital buffers, and manageable asset quality.”
While the central bank admitted that financial pressure could be felt in specific borrower segments, it said that these risks remained contained and that there was no evidence of widespread deterioration.
The BSP also reminded banks to remain disciplined. Banks, it added, are expected to employ strict lending standards, maintain adequate provisioning and have strong governance as well as enough capital and liquidity buffers.
The central bank acknowledged Fitch’s review and said that it continued to closely monitor credit quality, profitability, liquidity and capital adequacy and was prepared to step in if needed.
“The BSP stands ready to take appropriate supervisory action, as needed, to preserve financial stability and protect the public,” it said.
