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Philippine banks support greater mobility
MANILA, Philippines — Philippine banks are strongly supporting greater mobility for fully vaccinated Filipinos to spur domestic consumption and allow the economic recovery to gain more traction, according to the Bankers Association of the Philippines (BAP).
With more than half of the population vaccinated in the National Capital Region (NCR) and adjacent areas, BAP president Jose Arnulfo “Wick” Veloso said spurring economic activity could be best achieved by easing mobility restrictions, particularly for fully vaccinated individuals.
“The mobility of fully vaccinated Filipinos will encourage spending on various goods and services, including tourism, hospitality, and transport industries that are among those hit the hardest by this ongoing pandemic. Domestic consumption is a good first step on the road toward the country’s recovery,” Veloso said.
Veloso, president and chief executive officer at Lucio Tan-led Philippine National Bank (PNB), said that most business activities are situated in metropolitan Manila and nearby provinces.
Veloso said the successful rollout of COVID vaccine is key to overcoming the global health crisis.
The Philippines economy shrank by a record 9.6 percent last year, ending 21 years of positive growth.
The country, however, exited the pandemic-induced recession with a GDP growth of 11.8 percent in the second quarter, a complete reversal of the 3.9 percent contraction in the first quarter.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the gross non-performing loan (NPL) ratio of the banking sector hit a fresh 13-year high of 4.61 percent in July from 4.48 percent in June.
Data released by the central bank showed the soured loans of the banking sector jumped by 66.3 percent to P487 billion in July from P292.76 billion in the same month last year.
As a result, the industry’s allowance for credit losses increased by 24.7 percent to P401.5 billion from P322.07 billion, translating to an industry’s NPL coverage ratio of 82.44 percent in end-July from 110.01 percent in the same period last year.
BSP Governor Benjamin Diokno earlier said the NPL ratio may accelerate to a range of five to six percent this year and peak at 8.2 percent next year.
“We estimate that the NPL ratio is likely to peak at 8.2 percent in 2022, which is twice the current NPL ratio, but will decline in the years thereafter. This level is significantly lower than experienced by the banking system during the Asian financial crisis,” Diokno said.
However, the BSP chief said the Philippine banking system remains stable amid the COVID crisis and is in a strong position to service the financing requirements of the recovering economy.
“The positive performance of the Philippine banking system is evidenced by sustained growth in its assets, deposits, and capital, as well as ample capital and liquidity buffers and loan loss reserves,” Diokno said.
Source: https://www.philstar.com/business/2021/09/28/2130106/philippine-banks-support-greater-mobility