Philippines said to be least vulnerable to financial shocks

Although most banks in the Asia-Pacific are facing higher risks due to the prolonged debt crisis in the eurozone, those in the Philippines may not be affected as much as the rest of the region, Moody’s Investors Service said.

The credit rating firm said that, compared with its counterparts in the region, the Philippine banking sector is considered to be one of the least vulnerable to financial shocks stemming from the crisis.

Moody’s rated 16 Asia-Pacific economies in terms of exposure to risks. Only the banking sectors of the Philippines and Indonesia were placed in the “less exposed” category.

In a report, Moody’s said Asia-Pacific banks should weather the crisis in the West, but it would not be immune from the spillover effects.

It said that the regulators throughout Asia-Pacific would have to come out with measures to counter risks.

“Our central scenario assumes a resilient credit environment for banks in Asia-Pacific in 2012. However, we view potential hazards, or pockets of weaknesses in our surveillance that have the potential of degenerating into material adverse shocks to particular systems,” Moody’s said in its report.

Economists said investments made by Asia-Pacific banks in eurozone debt notes, and the decline in the region’s export incomes posed the greatest threats.

But Moody’s stressed that, although the risk factors remained low, the probability of an adverse occurrence had increased.

The links of Asia-Pacific banks outside the region makes it vulnerable to external shocks, it explained.—Michelle V. Remo