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Fitch Ratings in a report released on Monday said the stress tests on Philippines' banks reveal that most banks remained resilient despite the downturn. In line with this, the rating agency maintained the stable outlook on those banks' credit ratings.
Fitch said that in spite of very challenging macro economic conditions present as also its own reasonably-stressed assumptions, the probability for capital impairment for most Philippine banks still appeared low. Fitch said this in the context of its report tittled " "Stress Tests on Philippine Banks".
The firm noted that although the banks' earnings could be lower over the next two years compared to 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration.
Based on its report, Fitch said 11 Philippine banks rated by it have credit tolerance, meaning they have reasonable earnings and capital cushions to absorb higher losses in the current challenging environment and therefore had a stable rating outlook. However, one or two of the banks seemed to show lower credit tolerance under the agency's stress tests. "Such banks may need to strengthen their capital position - particularly core equity - in order to avoid downward pressure on their credit ratings", Fitch noted.
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