THE BANKING SECTOR in Southeast Asia, including the Philippines, may face asset quality risks amid rising household debt, Moody’s Ratings said.
“High household debt amid elevated interest rates have increased asset risks to several Association of Southeast Asian Nations (ASEAN) banking systems and weakened their credit profiles,” it said in a report.
“Most ASEAN economies saw a sizable increase in household debt over the past decade, supported by strong consumption spending and improving financial inclusion.”
In its report, Moody’s Ratings looked at six ASEAN economies including the Philippines and assessed the overall risk of the household sector to each country’s banking systems. It studied risk factors such as interest rate environment, retail lending growth, and capital and loan loss buffers, among others.
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