‘Philippine banks among least affected by US tariffs’

In Asia-Pacific

MANILA, Philippines — Philippine banks are among the least exposed in Asia-Pacific (APAC) to the credit risks stemming from the United States’ latest import tariff hikes, according to credit watchdog Moody’s Ratings.

Despite the US imposing tariffs on goods from most of its trading partners, Moody’s said the impact on banks in the Philippines is “low,” thanks to the country’s limited trade exposure to the US and a relatively diversified economy.

“Within APAC, the lowest additional US tariffs are now in Australia, New Zealand, Hong Kong, Singapore, Mongolia and the Philippines, with these economies’ banks experiencing the least damage from direct tariffs,” Moody’s said in the report dated April 7.

The Philippines recorded a 17-percent increase in US tariffs. But exports to the US accounted for just 2.9 percent of gross domestic product –one of the lowest in the region.

Moody’s noted that this minimal exposure shields local banks from heightened loan risks that could arise from slowing exports.

In contrast, banks in Vietnam, Thailand and Bangladesh are expected to face the greatest credit stress due to their economies’ heavier dependence on exports to the US.

These countries also saw some of the steepest tariff hikes: 46 percent for Vietnam, 36 percent for Thailand and 37 percent for Bangladesh.

“The main impact on loan quality will come from small and midsize enterprises in these countries, which have limited financial buffers to adjust to rapidly changing economic and trade conditions,” the debt watcher said.

Moody’s also flagged a moderate impact on banks in China, India, Indonesia, Japan, Korea, Malaysia and Taiwan, noting that some may still face pockets of vulnerability despite broader economic buffers or diversified exports.

To cushion the blow from reduced trade, the report noted that central banks in more affected economies could cut interest rates or slow the pace of monetary tightening.

Governments are also expected to offer targeted support such as loan restructuring or sector-specific relief.

The Philippines holds a Baa2 stable credit rating from Moody’s, a notch above minimum investment grade, reflecting the country’s sound fiscal position and resilience to external shocks.