‘High household debt risky for Phl banks’

Banks in the Philippines are facing moderate risk from household debts given the still huge proportion of underserved Filipinos from formal financial institutions, even as interest rates were the steepest in the country, a global credit watcher said.

- By LOUISE MAUREEN SIMEON

In a report, Moody's said overall risk to the banking sector is moderate in terms of household debt in the Philippines compared to Thailand and Vietnam, which face high risks.

In major Southeast Asian economies, the Philippines shares a moderate risk assessment with Indonesia and Malaysia.

Moody's said banks in the Philippines face a moderate level of risk given that households are not highly leveraged and the stable operating environment of these banking systems will support overall asset quality.

“Household leverage remained low in the Philippines, given its higher proportion of underserved and unserved populations by formal financial institutions,” Moody's said.

While household debt in the country has grown, this is coming from a low base and remains below regional counterparts.