RP banks’ credit profiles to bottom out by yearend – S&P

HONG KONG – Standard & Poor’s said the flow-through effect of the recent US economic rebound on the export-oriented economies of Asia may help the credit profiles of the banks in the Philippines to bottom out by the end of the year.

The ratings agency’s remarks were carried in a new report entitled "US Economic Rebound Positive for Asian Banks" by senior banking analysts based across the region.

"A year ago, we warned that if Asia’s economic slowdown was worse than expected, many of the region’s weaker banks would be severely tested. Fortunately, the US economic rebound has been quicker and stronger than expected," said Ian Thompson, managing director of financial services ratings at Standard & Poor’s Melbourne office.

Non-performing assets, including restructured loans, are estimated to account for about 25 percent to 30 percent of the Philippine banking sector’s gross loan book. "Although the weakened position of the country’s banks continues to support the view that the outlook for the sector remains negative, there are signs that better prospects for the economy may see the banks’ financial profiles bottoming out towards end-2002," said Sim Wee Kiat, a financial services analyst at Standard & Poor’s Singapore office.

The regional banking report is accompanied by a related article entitled "Low Recovery Rates Exacerbate Problem Assets for Banks in Emerging Asia".

Both reports are available at www.ratingsdirect.com, as well as at www.standardandpoors.com.