The credit rating of the Philippine banking system was raised by a notch by Standard & Poor’s Global Ratings, citing favorable economic environment that is supportive of growth of banks, sound regulations, and improving industry fundamentals and trends.
With the upgrade, the local banking sector is now classified under the stronger category of ‘6’ from the previous ‘7’ on a scale of 1 to 10, with the latter reflecting the highest risk.
“High household consumption, investment, and exports (mainly of electronics, commodities, and services) continue to support economic activity,” S&P said in its latest Banking Industry Country Risk
Assessment (BICRA) report on the Philippines released Tuesday.
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“These strengths will likely be underpinned by strong household and company balance sheets, sound growth in jobs and income, inward remittance flows, and an adequately performing financial system.”
It mentioned the Duterte administration’s Tax Reform for Acceleration and Inclusion (TRAIN) and infrastructure agenda, saying these would respectively help improve the government’s fiscal situation and overall economic performance, which in turn will provide a favorable operating environment for banks.
