MANILA, JUNE 20, 2008
(STAR) By Des Ferriols - Despite the shocks that rocked the global financial institutions in recent months, Moody’s Investor Service said its outlook for the Philippine banking system remains “stable”.

Moody’s said its stable outlook stemmed from the benefits of structural reforms that have kept Philippine banks out of trouble and led to the wholesale clean-up of loan portfolios to reduce risks.

Moody’s said yesterday that the overall outlook for the banking systems in Southeast Asia are mixed, but the impact of the tightening global credit markets has been moderate.

“A number of mitigating factors will serve to cushion the impact on the banks of the current credit crunch, the sub-prime crisis, slowing global economies, and rising inflation,” said Moody’s senior vice president Deborah Schuler.

According to Schuler, these mitigating factors include the underlying growth rates of the Asian economies, the very limited involvement of most regional banks in the global capital markets, and their generally healthy financial conditions.

Schuler’s assessment was contained in the latest version of Moody’s annual Asia Banking Outlook, which looked at a total of 15 regional systems.

Specifically, Indonesia, Malaysia, Singapore and Vietnam, according to Schuler, faced negative industry outlooks, while Cambodia, the Philippines and Thailand have stable outlooks.

“In the case of the negative industry outlooks, common reasons include the global economic slowdown and rising inflation, and the consequent impact on operating environments,” said Schuler.

In Indonesia, Schuler said there was a “sense of deja vu” as banks faced macro-economic conditions similar to those prevalent in late-2005, when the government lifted fuel subsidies.

“With the stable outlooks, a wide range of factors are in play,” she said.

In the Philippines, Schuler said banks continued to enjoy the benefits of structural reforms that addressed inherent weaknesses in the banking system.

In terms of sub-prime-related exposures, these have been small and banks in the region have managed to keep losses well contained within their strong earnings.

The Philippines, in particular, had no exposure in sub-prime-related investments that have caused significant losses in major banking institutions.

Government borrowings down 10.2% to P216B in 5 mos By Iris C. Gonzales Friday, June 20, 2008

Total government borrowings in the first five months of the year plunged 10.2 percent to P216.05 billion from P240.55 billion a year ago as the government trimmed its foreign loans in favor of domestic borrowings, latest data from the Bureau of the Treasury (BTr) showed.

Of the amount, gross external borrowings amounted to P42.08 billion from January to May or 56.6 percent lower compared to the P97.06 billion recorded in the same period last year.

On the other hand, gross domestic borrowings stood at P173.97 billion during the five-month period against P143.49 billion recorded in the same period last year.

This is an increase of 21.2 percent as the BTr sold more Treasury bills (T-bills) and bonds during the five-month period.

Treasury data also showed that payments for maturing foreign and domestic obligations fell three percent to P198.53 billion during the period from P205.68 a year ago.

Of the amount, payments for foreign loans amounted to P48.48 billion during the first five months of this year from P21.95 billion last year.

On the other hand, payments for domestic loans amounted to P150.05 billion from January to May as against P182.74 billion in the same period last year.

The government was able to trim the budget deficit in the first five months of the year to P18.8 billion from the P41.8 billion deficit recorded in the same period last year.

Total revenues for the period amounted to P482.4 billion, 11.5 percent higher than the P432.6 billion recorded during the same period last year.

Expenditures, meanwhile, amounted to P501.2 billion from January to May, up by 5.7 percent from the P474.4 billion recorded during the same period last year. 

Chief News Editor: Sol Jose Vanzi

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