THE local banking system is regarded as one of the world’s strongest no matter the volatilities hounding the multitrillion-peso industry, an international credit watcher said.
In its most recent assessment of the local banking system, Moody’s Investment Services reaffirmed its positive outlook on Philippine banks given its healthy credit and asset profiles and its improving regulatory environment.
A positive outlook hints of a possible upgrade within the next 12 to 18 months, effectively making the country an outlier or standout in an industry hounded by tougher competition and more stringent regulatory capital mandates.
“The Philippines is the only banking system of the close to 70 that Moody’s rates globally, which carries a positive outlook.
This year is the third in a row since December 2012 that Moody’s has maintained a positive outlook for the Philippine banking system,” the debt watcher said.
Moody’s assessed the county’s banking system in terms of operating environment (which Moody’s assessed as improving); asset quality and capital (rated stable); funding and liquidity (also rated stable); profitability and efficiency (improving); and systemic support (improving).
“The positive operating environment is supportive of the banks’ asset quality.
Moreover, given their strong capitalization and reserve levels, the banks are well-positioned to manage unexpected downward pressures,” Moody’s Assistant Vice President and Analyst Alka Anbarasu said.
“Ample domestic liquidity conditions have also strengthened the banks’ funding and liquidity profiles, and we expect profitability levels to gradually improve,” the Moody’s official added.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. welcomed the recognition, saying this validated the banking sector’s strength and contribution to the overall growth of the $270-billion economy.
“The positive banking sector outlook from Moody’s—which the Philippines solely enjoys out of 69 countries—cements the view that banks in the country have what it takes to continue serving the funding requirements of a robustly growing economy while keeping their balance sheets healthy,” Tetangco said.