S&P raises outlook for RP banks

S&P raises outlook for RP banks

MANILA: Banks in the Philippines now earn more, are better
managed, and seeing their asset quality improve six years after
the Asian crisis, Standard and Poor's (S&P) said on Friday,
raising its outlook for the sector to stable from negative.

"The change acknowledges the stabilizing of the banking sector
in terms of asset quality that is evident from the tapering
growth rates in non-performing assets" as well as improved
profits, the U.S.-based credit rating outfit said in a statement.

Owing to low interest rates, the banks are better able to
manage their funding costs as well as carrying costs for the
soured loans, it said.

"This is in contrast to a period of aggressive loan growth
prior to the 1997 Asian financial crisis and weak risk management
practices that led to a deterioration in commercial banks' asset
quality."

S&P credit analyst Sim Wee Kiat however said the level of non-
performing loans remained high by international standards, and
the system "still faces some challenges, as reflected by the high
industry risks in the country, compared with other developed
banking markets." --AFP