The Bangko Sentral ng Pilipinas (BSP) announced the commemoration of the 2025 National Banking Week from Jan. 1 to 7, 2025.
It said that with the theme “Bank and Citizen: Working Together Towards a Prosperous Tomorrow,” the event emphasizes the critical role of collaboration between the public and the banking sector to promote economic development and promote the financial prosperity of everyone.
The BSP earlier said the Philippine banking system remained stable.
The International Monetary Fund (IMF) confirmed this, saying overall systemic risk is moderate and broadly unchanged since last year.
“The banking system is well-capitalized, liquid, and profitable, supported by generally conservative lending standards and a stable deposit base. Banks have also benefitted from increased net interest income with systemwide non-performing loans (NPLs) contained at 3.5 percent,” the IMF said in its latest country report for the Philippines.
“Credit growth is healthy, and the credit gap is estimated to have closed (Figure 6). Despite the increase in interest rates, residential real estate prices have held up well and credit to the sector continues to grow,” the IMF said.
The IMF warned, however, that pockets of vulnerabilities remain. “Parts of the commercial real estate sector have seen persistently high vacancies and falling rents. Residential real estate NPLs stand at 6.8 percent, above pre-pandemic levels. Hence real estate loans, at 20.0 percent of banks’ loan books system-wide, require close monitoring as of end-June 2024,” it said.
The IMF said the rapid growth in consumption loans (about 25 percent annually), though such credit only represents about 10.6 percent of total bank loans as of end-June 2024, also warrants close monitoring.
“So do banks’ holdings of government securities, which have increased since the pandemic, and their exposures to corporates, including through complex conglomerate structures. External borrowing by corporates has increased slightly in recent years but remains stable as a share of GDP (under 10 percent), though hedging markets remain underdeveloped,” it said.
The IMF said the BSP should be ready to adjust macroprudential policy in line with developments in the financial cycle to preempt the build-up of vulnerabilities.
“As monetary policy eases, and the pick-up in investment materializes, credit demand may increase, requiring vigilance. The BSP could separately move toward a positive neutral level for the countercyclical capital buffer (CCyB) and further develop a CCyB decision framework in parallel. Gradual phase-in of higher capital requirements during the expansion phase of the financial cycle could mitigate excessive credit growth and strengthen banks’ capacity to absorb losses in the event of financial stress,” it said.
