Philippine banks' COVID-19 rebound faster than in 1997 crisis: banking group

Local lenders may rebound in three to four years.

Philippine banks' recovery from the effects of the COVID-19 pandemic will be faster than their rebound from the 1997 Asian financial crisis due to record-low interest rates, higher capital, and a stable economy, reports Bloomberg, citing the head of the country’s banking group.

Local lenders may rebound in three to four years, about half the time it took after the 1997 crisis, as banks aggressively provision for probable losses, said Cezar Consing, president of the Bankers Association of the Philippines.

"This crisis might be more impactful on the economy, but the banking system at the same time is better able to handle some of the stresses," he added.

Consing said bad loan ratio may peak at 6%-7% this year, compared with the 4% in 2020 but far lower than the 20% level seen during the 1997 crisis. This would mean banks hold about $15.5b (PHP744b) in bad debt out of a total of $221b (PHP10.63t) of loans at the end of November.

Here’s more from Bloomberg.