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‘Banks to manage credit risks after franchise vote’


‘Banks to manage credit risks after franchise vote’

An organization of universal and commercial banks assured the banking public on Tuesday of its members’ credit management capacity after a House panel rejected ABS-CBN Corp.’s application to resume its radio and television broadcasting operations, sparking fears it would hurt the economy and investments.

“The Bankers Association of the Philippines (BAP) expresses its confidence in the capacity of banks to manage their credit portfolio in relation to the nonrenewal of the ABS-CBN broadcast franchise,” it said in a statement.

“The banking industry remains strongly capitalized and in solid liquidity position to manage credit risks,” it added.

According to the group, banks have withstood various crises in the past because of the Bangko Sentral ng Pilipinas’ (BSP) prudential measures that allowed the sector to remain strong and healthy.

“In the midst of today’s pandemic and concerns on the nonrenewal 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,” BAP said.

It is also confident its members are prudent and take the welfare of their depositors seriously.

“Your deposits are protected,” the organization assured bank clients.

BAP members are the Asia United Bank, BDO Unibank Inc., BDO Private Bank Inc., Bank of Commerce, Bank of the Philippine Islands, China Banking Corp., CTBC Bank (Philippines) Corp., Development Bank of the Philippines, East West Banking Corp., Land Bank of the Philippines, Maybank Philippines Inc., Metropolitan Bank and Trust Co., Philippine Bank of Communications, Philippine National Bank, Philtrust Bank, Philippine Veterans Bank, Rizal Commercial Banking Corp., Robinsons Banking Corp., Security Bank Corp., Union Bank of the Philippines and United Coco Planters Bank.

The statement comes after the House Committee on Legislative Franchises, in a 70-11 vote, decided not to renew the media conglomerate’s franchise on Friday after its previous one expired on May 4.

The company’s management and employees expressed pain and sadness over the decision, while other members of the media, academic groups and social media users condemned it, with many calling it an assault on press freedom. The vote also prompted analysts and observers to express concern that the country’s economy and investor confidence might suffer because of it.

The statement also comes after BSP Governor said earlier that banks’ nonperforming loans (NPL) remained within manageable levels, compared with the 3- to 3.4-percent NPL ratio in the first half of 1997, when the Asian financial crisis started. The ratio peaked at 17.6 percent in 2002.

Latest available data showed that banks’ gross NPLs picked up by 20.01 percent to P262.68 billion at end-May from P218.88 billion a year ago.

NPLs are past due loans where the principal or interest is unpaid for 30 days or more after the due date, including the outstanding balance of loans payable in monthly installments when three or more installments are in arrears.

Their total loan portfolio climbed by 7.24 percent to P10.81 trillion in January to May from P10.08 trillion a year earlier.

These figures translate to a gross NPL ratio of 2.43 percent, higher than the year-ago 2.17 percent.


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