‘Too big to fail’ banks remain on solid footing despite pandemic: BSP

Warren de Guzman, ABS-CBN News

Posted at Jun 10 2021 08:56 PM

MANILA - The Bangko Sentral ng Pilipinas said it is monitoring the health of banks considered “too big to fail” but sees no cause for worry despite the disruptions caused by the COVID-19 pandemic. 

The BSP said on Thursday that it continues to carefully monitor banks Domestic Systemically Important Banks or D-SIBS.

BSP Governor Benjamin Diokno said it is the central bank’s policy not to reveal which banks are considered D-SIBS but he noted that these banks remain on solid footing amid the pandemic. 

“Total assets and deposits of D-SIBs grew year-on-year by 6.2 percent and 8.5 percent, respectively, based on preliminary end-March 2021 data. This is in line with the 5.6 percent asset growth and 7.8 percent deposit growth posted by the Philippine banking system,” Diokno said. 

The loans of D-SIBs meanwhile contracted slightly lower at 3.6 percent, which is similar to the 3.9 percent decline in the banking system’s loan portfolio, Diokno added.

Diokno said D-SIBs’ non-performing loan (NPL) ratio also slightly increased to 3.3 percent in the first quarter of 2021 but this was matched by a high NPL coverage ratio of 99.4 percent.

Meanwhile the BSP also called for more government assistance for medium, small and micro enterprises (MSMEs) which account for over 60 percent of employment in the Philippines. 

"BSP recognizes the importance of Micro, Small and Medium enterprises in generating employment and economic activity. To this end, the BSP continues to allow loans to MSMEs be counted as an alternative compliance to a bank’s reserve requirements,” Diokno said.

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