Local banks seen weathering COVID-19 crisis well

The local banking system is well-positioned to withstand the shocks brought about by the COVID-19 crisis as its resources continue to increase, the Department of Finance (DOF) said Friday.

In an economic bulletin, Finance Undersecretary and chief economist Gil S. Beltran noted that as of May, the banking system’s resources further rose to P18.7 trillion from P17.5 trillion a year ago.

As a share of gross domestic product (GDP), the banking sector’s total resources at end-May were equivalent to 95.8 percent, up from 93.9 percent last year.

“The Philippine banking system grew faster than nominal GDP during the period 2018 to May 2020 despite the pandemic due to sound macroeconomic fundamentals that have boosted bank resources, loan portfolios and financing options,” Beltran said.

The end-May gross loan portfolio increased to P10.8 trillion from P10.1 trillion a year ago.

As of May, the net loan portfolio also climbed to P10.5 trillion from P9.8 trillion such that the share to GDP inched up to 53.8 percent from 52.8 percent.

“Following the global bond issues that fetched a tight spread of US Treasury + 180 basis points on its 10-year issues, Philippine banks and corporates issued, during the last seven weeks, their own bonds at the international capital markets amounting to $3.6 billion for a total of $5.2 billion year-to-date,” Beltran said.