PH banks’ credit profile on the rise, says watchdog

Philippine and Asian banks now have credit profiles as good as, if not superior to, those in the United States and Europe, according to the Moody’s Investors Service. PHOTO BY RICK ALBERTO

Banks in the Philippines and other emerging economies in Asia now have credit profiles as good as, if not superior to, those in the United States and Europe, according to Moody’s Investors Service.

In a statement, Moody’s recognized that the long-standing assessment that Western banks are more credit-worthy than emerging Asian banks no longer holds true.

The credit rating firm said this development became apparent during the latest global economic turmoil, spawned by some Western banks but which did little damage to Asian institutions.

“The ratings gap that had long separated banks in Asia from their Western peers has now essentially been closed because the credit quality of Asian banks throughout the financial crisis has resulted in a comparative improvement in their ratings,” Jean-Francois Tremblay, an associate managing director for Moody’s, said in a statement.

Moody’s said that despite the uncertainties in the global economy, Asian banks, including those from the Philippines, have shown resiliency and enjoy sufficient liquidity.

“In contrast to Western banks that have experienced significant credit quality challenges since the outset of the global financial crisis, Asian banks are only moderately leveraged, largely deposit-funded and generally conservative in their lending,” Tremblay added.

The statement by Moody’s appears to reinforce the claims of Philippine regulators, who said banks in the country have very limited exposure to the debt woes in Europe.

The Bangko Sentral ng Pilipinas earlier said that its latest stress test revealed that only 1.1 percent of assets of banks in the country are invested in euro-denominated assets,–Michelle V. Remo