Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno
MANILA, Philippines—The Philippine banking sector remains sound, stable and supportive of the financing requirements of the recovering economy, despite the country having gone through its sharpest contraction in recorded history in 2020 due to the pandemic.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno noted that even after absorbing the full impact of the COVID-19 public health crisis, local banks remain capitalized well above the 10 percent minimum requirement of the regulator and the 8 percent international standard.
Most importantly, the BSP chief told The Asset Magazine’s 16th Philippine Summit conducted online, that lending activity has turned a corner after growing 1.3 percent in August from 2020—the first expansion following the eight successive months of declines starting December 2020—while the system-wide nonperforming loan ratio remained “manageable”.
In his speech, Diokno also expressed confidence in the Philippines’ economic recovery.
“A year and a half since the pandemic, we are getting back on our feet,” he said. “We have learned to live with the virus better with the government shifting to a risk-based approach to mobility restrictions. This strategic shift has resulted in better economic and health outcomes.”
Diokno added that the 11.8 percent gross domestic product growth in the second quarter of 2021 was due to more than just base effect but also “reflects the impact of the fiscal and monetary policy support during the pandemic.”
He said the growth was also aided by the calibrated imposition of mobility restrictions which enabled many businesses, including public transportation, to continue operations.
The BSP chief also cited data indicators showing that the Philippine economy was on the mend, such as improvements in manufacturing, employment, foreign direct investments and external trade.
He said that the BSP is keeping its policy settings and regulatory relief measures supportive of the recovering economy, and stressed that withdrawal of relief measures will only be done once full recovery is underway.
“The monetary authorities will continue to provide an enabling environment for the attainment of the Philippines’ long-term economic goals, such as through price and financial stability, and promotion of financial digitalization and sustainable finance,” Diokno said.
The BSP chief also urged stakeholders to help speed up economic recovery by ensuring that the benefits of digitalization and financial sustainability “reverberate in the economy” and in Filipinos’ lives “sooner than later”.