Even as COVID-19 continues to fuel uncertainties across institutions in the local financial sector, Philippine banks remain in a good position to survive the pandemic at least in the foreseeable future, according to Union Bank of the Philippines (UnionBank) chief financial officer and treasurer Jose Emmanuel Hilado.

In a recent webinar conducted by financial services firm Moody’s Investors Service, Hilado said the Philippine banking industry’s resiliency is due to a number of reasons, among these is the fact that the banks are strongly capitalized.

“The total capital adequacy ratio is about 15.8 percent for the whole industry. The average tier 1 capital of the top 10 banks is 13.6 percent. Compare that to the minimum required by the BSP (Banko Sentral ng Pilipinas) of 10 to 11 percent depending on your status. So, there is a lot of buffer,” Hilado said.

In addition to this, he said that the country’s banking system is buoyed by consistent leverage ratios in the last decade or so, which is an indication that “banks have been able to bring in additional capital every so often.”

“If you look at the historical record for the past 12 to 13 years, roughly, it would be 12.6 percent. If you look at the loan growth of the banks for that period, loan growth has gone up by about five times, yet the leverage ratio has remained the same throughout,” he said.

Another critical factor contributing to the strength of banks in the country, Hilado said, is the way the BSP has been governing them, highlighting the institution’s strict enforcement of relevant guidelines and how these have served the country’s economy in the long run.

“The BSP has always been one of the leading regulators when it comes to implementing rules, and they have always been very conservative, and sometimes in the past we would complain that they we’re too conservative. But now that we’re undergoing a crisis, we already know that their conservatism was necessary,” Hilado added.