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