MANILA, Philippines — The Financial Stability Coordination Council on Friday reaffirmed the strength of the Philippine financial system while warning that concentrated corporate exposures and rising leverage warrant close monitoring.
At its quarterly meeting March 13, the council said it is expanding surveillance of nonbank financial institutions and strengthening data sharing among its member agencies to address emerging risks.
“The banking system’s resilience is underpinned by strong capital and liquidity,” Bangko Sentral ng Pilipinas Governor Eli M. Remolona Jr., who chairs the council, said in a statement.
The council, which comprises the BSP, the Department of Finance, the Securities and Exchange Commission, the Insurance Commission and the Philippine Deposit Insurance Corp., said corporate balance sheets remain sound. But it noted that concentrated exposures among large conglomerates and interconnected economic sectors could amplify shocks.
Members also discussed increases in corporate leverage, consumer credit and housing loans, saying that “growth and risk often travel together.”
To address risks tied to new business models among nonbank financial institutions, the council said it is improving data quality and oversight mechanisms.
The council also cited the PDIC’s efforts to refine early intervention frameworks to address bank distress swiftly and preserve public trust.
The FSCC reaffirmed its commitment to working with market stakeholders to maintain a sound and agile financial system.
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