The robust state of banks across the Philippines has encouraged the Bangko Sentral ng Pilipinas (BSP) to plan the introduction of more reforms designed to allow the P10.5-trillion industry to compete on even footing with regional rivals and make them more inclusive for local clients down the line, as well.
The BSP said more banking reforms will be introduced this year as the monetary authorities take advantage of the strong financial position of the local lenders based on the 2014 data.
At a recent speaking engagement, BSP Governor Amando M. Tetangco Jr. said that aside from working on monetary stability, the “BSP will continue its banking-reform agenda appropriate to our own operating environment.”
Tetangco said the banking system has been a source of strength for the Philippine economy because of its sound, stable and liquid state at present and best indicated by the high level of public trust in the system that, in turn, allowed deposits to achieve record-high levels last year.
“Overall, our banks have strong balance sheets, solid asset growth, low NPL [nonperforming loan] ratios and above-standard capital adequacy ratios as a result of good governance and adherence to international best practice in risk management,” Tetangco said.
“Indeed, our banks are fully engaged with us in our efforts to help ensure that our system is sound, that its operations are aligned with international standards, and that its reach covers more of the previously unbanked or unserved areas,” he added.
The BSP also vowed to pursue a more
aggressive approach to regulation, aside from the wave of reforms put in place last year.
“These reforms will impact the way banks do business with you. But these are calibrated to enhance the protection of bank clients and to ensure the stability of the financial and the economic system as a whole,” Tetangco said before members of a non-governmental organization on Friday.
While specific reforms were not disclosed, Tetangco previously said the continuing reforms, planned under the Basel 3 Accord, include facets under liquidity and leverage ratios.
The BSP implemented reforms in the second half of last year, including those under capitalization, the handling of systemically important banks and the shift of focus from collateral to the borrowers’ ability to pay.