Manila: The Bangko Sentral ng Pilipinas (BSP) on Friday said the Philippine banking system remains well positioned to withstand potential shocks, but it continues to monitor risks to credit quality.

According to Philippines News Agency, the central bank issued the statement after Fitch Ratings warned that recent economic challenges in the Philippines are likely to drive higher credit impairments and lower profitability among banks this year. "The BSP notes Fitch's assessment and continues to closely monitor risks to credit quality, profitability, liquidity, and capital adequacy," the BSP said.

"Philippine banks remain well positioned to withstand potential shocks, supported by ample liquidity, adequate capital buffers and manageable asset quality," it added. The BSP said that while some pressure may emerge in specific borrower segments, risks remain contained, with no evidence of broad-based deterioration.

"The BSP expects banks to maintain prudent credit standards, adequate provisioning, strong governance, and sufficient capital and liquidity buffers," the central bank said. The BSP assured that it is ready to take appropriate supervisory action, as needed, to preserve financial stability and protect the public.