Philippine banks seen resilient amid global, local financial shifts

The Financial Stability Coordination Council (FSCC) said on Monday that Philippine banks remain well-capitalized and equipped with ample liquidity buffers, despite challenges arising from global financial conditions and domestic market shifts.

In a statement following its second-quarter meeting, the FSCC assessed potential vulnerabilities that may affect the country’s financial system, including volatile global markets, geopolitical tensions, and shifting domestic liquidity conditions. While acknowledging these risks, the council emphasized that the banking sector remains fundamentally sound.

The Bangko Sentral ng Pilipinas (BSP), which chairs the FSCC, reported that short-term external debt stood at $32.7 billion as of end-March, but added that the country’s gross international reserves—totaling $106.7 billion—provide a strong external liquidity buffer. The central bank said these reserves cover short-term obligations by 3.3 times.

The FSCC also reviewed initiatives aimed at enhancing financial resilience, including proposed reforms to the country’s deposit insurance system and improvements to risk-monitoring tools. According to the BSP, the council is enhancing its analytical framework to detect systemic risks across sectors and timeframes more effectively.

In its forward-looking surveillance, the FSCC identified several potential near-term threats to stability, including market volatility, policy uncertainty, global geopolitical pressures, and emerging technological disruptions.

"The FSCC remains committed to inter-agency coordination, data-driven risk monitoring, and deploying needed measures to preserve market confidence and financial system stability," BSP Governor and FSCC Chair Eli M. Remolona Jr. said.

The meeting also marked the introduction of newly appointed Securities and Exchange Commission Chairperson Francis E. Lim to the council. The FSCC includes the BSP, Department of Finance, Insurance Commission, Philippine Deposit Insurance Corporation, and the SEC.

The council said it will continue to monitor developments closely and work collectively to address emerging risks in a dynamic financial landscape.