MANILA, Philippines – The Philippine banking system is now more stable, thanks to the enactment of the new central bank charter that gives the regulator greater powers to quell nascent systemic financial problems, according an international risk rating firm.
According to S&P Global, local financial institutions’ Banking Industry Country Risk Assessment (BICRA) score now stands at “5”, from its previous level of “6” on a scale of 1 to 10, with 10 reflecting the highest level of risk.
In a report released last week, the debt watcher said it reduced the risk rating of Philippine banks owing to the favorable provisions of the New Central Bank Act, which will help the Bangko Sentral ng Pilipinas (BSP) better fulfill its mandate of promoting a sound financial system.
“We view these amendments as a positive step toward greater independence [of] and more effective implementation of prudent policies and measures [by the BSP],” S&P said.
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On top of the favorable regulatory development, S&P said the Philippine banking system is expected to withstand various risks like currency volatility and higher interest rates, given sufficient capitalization and strong domestic franchise that supports a growing deposit base.
Last month, President Rodrigo Duterte signed Republic Act No. 11211 after years of lobbying by the central bank for enhanced supervision powers from Congress.
