Moody's says Philippine banks 'stable' as it monitors virus risk

ABS-CBN News

Posted at Feb 20 2020 09:51 AM | Updated as of Feb 20 2020 10:08 AM

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MANILA -- The Philippines' banks are "stable" as reduction on reserve requirements make up for interest rate cuts, debt-watcher Moody's said Thursday.

Moody's is also monitoring the impact of the coronavirus outbreak, which has hurt consumption in parts of Asia. Under its "central case," the pathogen will be contained by the end of the first quarter, said Eugene Tarzimanov, lead analyst for banks in Southeast Asia.

Philippine banks' earnings will remain stable and margins will hold as the reduction in the RRR or reserve ratio requirement boosts liquidity, allowing banks to lend more as interest rates fall, he told ANC's Market Edge.

Should disruptions due to the virus outbreak persist past the first quarter, economic growth in Asia could slow, he said. China reported 349 new cases on Wednesday, from 1,693 the day before. It was the lowest since Jan. 25.

"There's optimistic news coming from China... Still, it's too early to say whether we're moving away from a negative scenario. It's still a risk," said Tarzimanov, also Moody's vice president and senior credit officer for the Financial Institutions Group in Asia.