The Philippines: Stress test shows Philippine banks remain stable, resilient

• An analysis of the financial soundness indicators of the Philippine banking industry showed that it is stable and resilient despite the global uncertainties related to the extent and path of the pandemic, according to the Bangko Sentral ng Pilipinas (BSP).
• Based on the report on the Philippine financial system for the second semester of 2020, the BSP said banks remained well capitalized as the capital adequacy ratio (CAR) of universal and commercial banks on solo and consolidated bases is well above the minimum thresholds set by the BSP at 10% and the Bank for International Settlements (BIS) at 8%.
• As of end-2020, the CAR of big banks improved to 16.6% and 17.1% on solo and consolidated bases, respectively, from the previous year’s 15.4% and 16%.
• The BSP said the industry’s risk-taking activities were supported by adequate capital mainly composed of common equity and retained earnings.
• Based on the BSP’s stress test exercise, big banks are also resilient to credit and market risk shocks. The results showed that post-shock CAR of combined universal, commercial, thrift, and other banking groups remained comfortably above the 10% threshold.
• According to the BSP, the COVID-19 pandemic tested the resilience of the banking system and the robustness of the financial ecosystem.
• Meanwhile, total loans covered by regulatory relief measures, particularly the delayed recognition of past due and non-performing loans (NPL), accounted for less than 3% of the industry’s total loan book as of end-Feb 21.

External Link : https://www.philstar.com/business/2021/05/10/2097018/stress-test-shows-philippine-banks-remain-stable-resilient

External Link : https://www.philstar.com/business/2021/05/10/2097016/past-due-npls-covered-forbearance-measure-minimal