Philippine Banks to Face Profitability Strains Amid Borrower Relief Efforts, S&P Says
The profitability of Philippine banks will face pressure under relief efforts for borrowers, S&P Global Ratings said in a Thursday release.The central bank carried out a temporary pause on borrower repayments due to the impact of increasing energy prices and supply chain disruptions.The measure could dampen profitability under peaking net interest margins and heightened credit losses, although it could also ease a surge in nonperforming loans, credit analyst Nikita Anand said.The pause in loan repayments for a year should help borrowers manage their cash flow better, the analyst said.S&P believes the country's banking industry has low exposure to sectors most exposed to the conflict, aiding in maintaining nonperforming loan levels.However, persistent conflict could boost problematic loans, especially for mid-sized corporates, smaller businesses, and lower-income consumers, the rating agency said.The banks' solid profitability and sufficient capitalization and liquidity should help them weather the shocks, S&P said.