General Information & Client Services
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
November 10, 2017

IMF published its staff report and selected issues report in the context of the 2017 Article IV consultation with Philippines. The Executive Directors notes the strong performance of the economy has continued, with rapid economic growth and low inflation. They also noted that the main systemic risks to financial stability are high credit growth and concentration. In addition, some conglomerates and real estate developers have leveraged significantly, while shadow-banking activities have expanded.

The staff report reveals that the banking sector in the country appears sound based on financial soundness indicators (FSIs), with ample liquidity, high capital, and low nonperforming loans (NPLs), although high credit growth needs to be closely monitored. This is because high credit growth and concentration are the key systemic risks to financial stability. Capital market development can help reduce bank loan concentration by diversifying the sources of funding for large conglomerates. FSIs also indicate pockets of vulnerability in the non-financial corporate sector. Although the share of non-financial corporate sector debt at risk is among the lowest in emerging market economies, some real estate developers have leveraged significantly, while expanding shadow banking activities through their acceptance of advances from households. Furthermore, the authorities are tightening anti-money laundering (AML) legislation, in line with the Financial Action Task Force standards.

Staff recommends the use of macro-prudential policies to address the systemic risks to financial stability. Targeted macro-prudential policies should be used in case of excessive credit growth to some sectors. Additionally, staff welcomes the early adoption of Basel III guidelines and the role of the new financial stability department at BSP, which is the central bank of Philippines. BSP is entrusted with mainstreaming macro-financial surveillance and strengthening the macro-prudential framework. The authorities broadly agreed with the assessment of systemic risks and policies to address them. Stress test results show that banks are resilient to a 20% write-off on their exposure to the top 20 conglomerates. Moreover, staff encouraged the authorities to consider introducing stress tests on debt-to-earnings ratios for corporates and developing a borrowers’ interconnectedness index. 

The selected issues report analyzes the spillover effects from US policy shifts and lower growth in China. The report also discusses the fiscal responsibility law and how Philippines would benefit from it, enshrining explicit fiscal rules with countercyclical elements and an independent fiscal council to improve accountability and transparency. 


Related Links

Keywords: Asia Pacific, Philippines, Banking, Article IV, Systemic Risk, Shadow Banking, Stress Testing, FSI, IMF

Related Insights

IAIS Publishes Drafts of Revised ICP 8, ICP 15, ICP 16, and ICP 20

IAIS published the drafts of revised Insurance Core Principles on Public Disclosure (ICP 20), Investments (ICP 15), Enterprise Risk Management for Solvency Purposes (ICP 16), and Risk Management and Internal Controls (ICP 8), along with a revised draft of the glossary on enterprise risk management (ERM).

November 14, 2018 WebPage Regulatory News

MAS Amends Notice 637 on Capital Adequacy Requirements in Singapore

MAS published the final, revised Notice 637 on the risk-based capital adequacy requirements in Singapore.

November 13, 2018 WebPage Regulatory News

ESMA Updates Q&A on Implementation of CSD Regulation and MAR

ESMA updated questions and answers (Q&A) documents on the implementation of the Central Securities Depository (CSD) Regulation and Market Abuse Regulation (MAR).

November 12, 2018 WebPage Regulatory News

FSB Finalizes and Publishes the Cyber Lexicon

FSB published a cyber lexicon, following the public consultation earlier this year.

November 12, 2018 WebPage Regulatory News

SRB Updates Liability Data Reporting Template for 2019

SRB published version 2.7.1 of the Liability Data Reporting (LDR) Template.

November 12, 2018 WebPage Regulatory News

ECB to Conduct Comprehensive Assessment of Six Bulgarian Banks

ECB will undertake a comprehensive assessment of six Bulgarian banks. The exercise, comprising an asset quality review and a stress test, follows Bulgaria’s submission of a request to establish close cooperation with ECB on July 18, 2018.

November 12, 2018 WebPage Regulatory News

IMF Publishes Reports on the 2018 Article IV Consultation with Chile

IMF published its staff report and selected issues report under the 2018 Article IV consultation with Chile.

November 09, 2018 WebPage Regulatory News

PRA Issues PS27/18 on Implementing the Extension of SM&CR to Insurers

PRA published the policy statement PS27/18, which provides feedback to responses to the consultation paper CP20/18, on implementing the extension of the Senior Managers and Certification Regime (SM&CR) to insurers (Part 2).

November 09, 2018 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for November 2018

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

November 09, 2018 WebPage Regulatory News

FED Finalizes the Large Financial Institution Rating System

FED finalized the new supervisory rating system for Large Financial Institutions (LFIs), to better align with the current supervisory programs and practices for these firms.

November 09, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2204