Moody's keeps 'stable' outlook on PH banks, warns of risk over Hanjin

ABS-CBN News

Posted at Jan 16 2019 10:06 AM | Updated as of Jan 16 2019 10:57 AM

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MANILA – Moody’s Investor Service said Wednesday it maintained a "stable" outlook on Philippine banks, even as loans to Korean ship-builder Hanjin, which is seeking rehabilitation, was "credit negative."

Hanjin’s Philippine unit sought court-assisted rehabilitation to pay a cumulative $412 million in debt to BDO Unibank, bank of the Philippine Islands, Metrobank, Rizal Commercial Banking Corp and LandBank of the Philippines.

Philippine banks are on "strong footing" with "robust" capital and liquidity buffers to withstand challenges that could come up in the next 12 to 18 months, Moody’s Investor Service vice president and senior analyst Simon Chen told ANC. 

"The impact is still manageable to all 5 banks that have reported exposures. I think, importantly the banks currently have strong footing given where the asset quality is at a previous strong level,” Chen said.

"We still have a stable outlook on the Philippine Banking system and we still maintain that view after this development," he said.

Hanjin's creditors, however, face "fairly sizable" credit losses if the shipbuilder would be forced into liquidation, he said. The losses could run as high as 130 percent of pre-provisioned income, he said.