|
By Likha C. Cuevas-Miel, Reporter
MOODY’S Investor Service said on Friday that
downward pressure on Philippine banks’ financial positions have
eased due to better economic conditions but credit risks remain
“moderately high” as their nonperforming assets are still a
burden.
“The positive economic factors support the
generally stable and in some cases positive ratings outlook on the
nine Moody’s-rated Philippine banks,” said Richard Lung, the
rating firm’s vice president and senior analyst, in a recent
report. Moody’s sees a “stable” outlook for the average D
financial strength rating for the local banks.
Despite the stronger fundamentals, local lenders
are still hounded by the risks posed by their bad assets accumulated
in the previous years. These nonperforming assets stood at P326.585
billion at end-June last year, according to the Bangko Sentral ng
Pilipinas.
In addition, the effect of the new risk
management systems and governance structures put in place the past
few years have yet to be seen while fiscal resource constraints
“will continue to limit the degree and type of assistance
available to troubled institutions,” Lung said.
Moody’s also noted that while the outlook on
the banks’ financial strength ratings is generally stable, the
outlook for the foreign currency deposit and debt ratings of eight
of the nine banks being rated was raised to “positive” from
“stable” last month. The upgrade reflected the change in the
outlook for the country’s foreign currency debt and deposit
ceilings and this may ease constraints on the lenders’ external
ratings in the future, the firm said.
The report released by the ratings firm pointed
out several structural factors that will limit the possibility of
upgrades in the banks’ ratings. These include a declining interest
rate environment, which will keep the banks from having the same or
higher gains or “generous risk-adjusted returns” that were
achieved before.
Moreover, the expansion by the larger, healthier
banks will be limited by the country’s “poor credit
infrastructure and generally low level of per capita income,”
Moody’s said.
The banks currently rated by Moody’s are the
Allied Banking Corp, Banco de Oro Unibank, Bank of the Philippine
Islands, Development Bank of the Philippines, Land Bank of the
Philippines, Metropolitan Bank and Trust Co., Philippine National
Bank, Rizal Commercial Banking Corp., and United Coconut Planters
Bank. Considered the biggest in the country, they account for the
bulk of domestic banking assets.
|
