The Bankers Association of the Philippines (BAP) assured that the country’s financial intermediaries can handle their loan portfolio following the rejection of a Lopez-led firm’s broadcast franchise.
The bankers’ group said it has “confidence in the capacity of banks to manage their credit portfolio in relation to the non-renewal of the ABS-CBN Corp. broadcast franchise.”
The banking sector is well-capitalized and has strong liquidity to manage credit risks, the BAP said.
According to preliminary data from Bangko Sentral ng Pilipinas, the financial system has capitalization of P2.37 trillion as of May. This translates to capital adequacy ratio of 12.62, which is above the regulatory requirement, for the same period.
The BAP said the efforts of the Central Bank to implement measures keeping the sector healthy and stable has allowed it to surpass crises.
“In the midst of today’s pandemic and concerns on the non-renewal of the ABS-CBN broadcast franchise, we strongly believe that banks will continue to be steadfast as they are supported by strong financial conditions, robust risk management systems and a good corporate governance,” the BAP said.
The association said it was also confident that BAP-member banks are prioritizing the welfare of their clients, ensuring their deposits are protected.
Last week, the majority of the House of Representatives committee tackling franchise of ABS-CBN denied the media firm’s application for renewal after a series of hearings.
Hit on financials
Analysts said that this could take a hit on the media company’s financial position as it is poised to lay off 11,000 employees amid the shutdown of its broadcast operations. De La Salle University economist Maria Ella C. Oplas told the BusinessMirror that this could diminish ABS-CBN’s revenues from advertisement, pulling its overall financial position.
Oplas added this could then pose challenges on the network’s cash flow, thereby potentially affecting its ability to settle obligations.
“With the denial of the franchise renewal, ABS CBN will not be able to resume its radio and television broadcasting operations which has been an integral part of its business,” Philstocks Financial Inc. analyst Japhet Louis Tantiangco said. He said that ABS-CBN might resort to liquidating its assets to pay off obligations.
According to its latest unaudited financial report posted in the Philippine Stock Exchange, ABS-CBN has total liabilities amounting to P48.43 billion as of end-September 2019. Of this amount, P21.23 billion comprises the loan agreements the company has with several banks throughout the years.
The media firm’s assets, meanwhile, reached an aggregate amount of P85.65 billion as of end-September 2019. A huge chunk of its assets includes property and equipment amounting to P27.87 billion.
Image credits: AP/Aaron Favila