Capital relief may push Philippine banks toward excessive risk: analyst

 BSP sees rates on a higher for longer path with further tightening likely, said CreditSights.

The Philippine central bank’s recent relief measures allowing banks to exclude losses tied to peso-denominated government securities may incentivize banks to take on more risk, warned CreditSights by Fitch Ratings.

The Bangko Sentral ng Pilipinas (BSP) announced in June 2026 that it is allowing banks and quasi-banks to temporarily exclude paper losses on the said securities from computation of banks and quasi banks’ regulatory capital.

Banks will still have to disclose the actual unrealised losses in their financial reports to the BSP.

The announced relief measures provide short-term relief especially for banks like RCBC and Security Bank, CreditSights said.

“[That] said, for the broader sector and over the longer term, we see the move as less constructive as setting such a precedent could incentivise banks to take on excessive duration or market risk,” it warned.

CreditSights maintained its “underperform” recommendation on Philippine Banks under its coverage, which included BDO, BPI, Metrobank, PNB, Security Bank, and RCBC.

“We view the move as a clear signal that the BSP sees rates on a higher for longer path, with further tightening to come,” CreditSights said.