Phl banks face moderate corporate asset risks – Moody's

The Philippines faces moderate corporate asset risks compared to its Southeast Asian peers, with domestic banks remaining largely resilient despite global headwinds and concentrated corporate exposures, according to Moody’s Ratings.

- - Keisha Ta-asan

In a report, Moody’s said Philippine banks’ exposure to corporates - accounting for about 73 percent of total system loans at end-2024 makes them more vulnerable to large-ticket defaults.

Still, the Philippines’ strong operating environment and moderate leverage levels are expected to help maintain stability compared to its peers in Southeast Asia.

"For the Philippines, corporate asset risks stem from high counterparty concentration which could result in material credit impact on banks in the event of corporate default," Moody's said.

It added that, unlike in Vietnam or Indonesia, Philippine corporates generally have adequate debt-servicing capacity and lower exposure to foreign currency debt, cushioning the system from volatility.