The local banking system remains stable despite the pandemic and has kept its robust position in servicing its fiscal requirements, the highest monetary authority in the land said.
“The positive performance of the Philippine banking system is evidenced by sustained growth in its assets, deposits, and capital, as well as ample capital and liquidity buffers and loan loss reserves,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said during a virtual press conference on Wednesday.
According to him, non-performing loans or NPL will remain manageable, despite being higher in 2022.
“The NPL ratio of the banking system will remain at single digit levels, owing to banks’ prudent credit risk management standards and the operationalization of the Financial Institutions Strategic Transfer Act or FIST,” he explained.
“We estimate that the NPL ratio is likely to peak at 8.2 percent in 2022, which is twice the current NPL ratio, but will decline in the years thereafter,” he added.
Diokno stressed that this forecast was significantly lower from what the banking system faced during the Asian Financial Crisis.
While at it, the BSP chief said that some banks have already expressed interest in availing FIST, which will help dispose of the banks’ soured assets.
“A few banks have expressed interest in disposing of their non-performing assets under the Act. They are just awaiting advice from the Securities and Exchange Commission (SEC) as regards the FIST corporations which the SEC has approved for establishment,” he said.
The central bank likewise expects credit activity to pick up in the coming months amid the retained accommodative policy stance of the BSP and the implementation of safety measures and granular lockdowns in the National Capital Region.
Latest banking industry survey showed that the credit outlook remains positive with double-digit growth in the next two years, the banking regulator said.