Fitch: Philippine banks vulnerable

Fitch Ratings said in a new report that Philippine banks' balance sheets still have some vulnerabilities arising from concentrated loan portfolios, lowly reserved foreclosed properties and, in the case of a few lower-rated banks, deferred charges.

The agency said concerns about asset quality and impairment risks have broadly receded, given expectations of continuing economic recovery in the country.

But there are some downside risks due to the knock-on effects arising from weaknesses in many Western economies, Fitch added.

In the event of a difficult economic environment returning, the agency said it is concerned that a concentrated loan book exposes Philippine banks to risks of a rapid rise in bad loans, which could weaken their balance sheets.

Such a probability, however, appears low given expectations of a more stable credit environment next year, Fitch said.

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