MANILA - The country's banking system will remain stable in the medium term on robust fundamentals the system and the country's macroeconomic stability, Moody's Investors Service said Monday.
“Nevertheless, some uncertainty over the direction of policy has emerged in recent months. [But] the banks' susceptibility to political risks is low,” Moody’s said in its "Banking System Outlook--The Philippines" report.
Alka Anbarasu, Moody's vice-president and senior analyst, said asset quality of local banks will remain broadly stable, supported by stable macroeconomic factors, and the stable debt-servicing metrics of borrowers.
“Profitability remains stable and the banks' high loss absorbing buffers will provide support for unexpected losses,” Anbarasu said.
The stable outlook on banks is good for the next 12 to 18 months.
Moody's said it expects the Philippine economy to achieve real gross domestic product growth of 6.5 percent for 2016 and 2017, driven by strong domestic consumption and an increased pace of investments.
“Business sentiment remains strong, banking sector credit growth will stay robust, and the economy has demonstrated resilience to global shocks,” Moody’s said.
“However, the country's growth prospects could be undermined, if there is a significant shift in the government's policies,” it added.