The country’s credit-to-GDP ratio of 63.6 percent as of Q2 2017 is still one of the lowest by far in Asia. Asset quality is satisfactory as the industry non-performing loans ratio further improved to 1.9 percent, coupled with banks’ prudent provisioning for credit losses. Meanwhile, banks maintained ample buffer of high-quality liquid assets and capital that collectively protect the system against shocks.
System-wide capital adequacy ratio recorded at 16.0 percent, is well above the BSP and the international minimum. Against this backdrop of strength, the financial system is also alert and responsive. We are ready to employ our monetary policy toolkit in light of policy normalization of the Federal Reserve which could affect capital flows, domestic interest rates and the foreign exchange rate.