Phl financial risks steady, says IMF

Overall systemic financial risks in the Philippines remain moderate and broadly unchanged from last year, with the banking system continuing to show strength amid lingering pockets of vulnerability, according to the International Monetary Fund (IMF).

- By KEISHA TA-ASAN

In a report, the IMF said the banking system is well-capitalized, liquid and profitable, supported by generally conservative lending standards and a stable deposit base.

The IMF also noted that overall credit growth remains healthy and “the credit gap remains closed,” pointing to a financial system that has so far absorbed domestic and external shocks without significant strain.

However, the IMF cautioned that several vulnerabilities warrant close monitoring, particularly in the real estate and household sectors.

“Commercial and residential vacancy rates remain persistently high in some regions and segments, reflecting still-elevated mortgage rates, supply overhang from the pre-pandemic construction boom and the exit of Philippine offshore gaming operators (POGOs) in Metro Manila," it said.

Despite these conditions, the IMF observed that residential real estate prices and loan growth have remained resilient, even as the residential real estate nonperforming loan ratio reached 6.4 percent as of end-June.