Manila: Japan Credit Rating Agency (JCR) highlighted the sustainable economic growth and soundness of the Philippine banking system. In its latest report Thursday, JCR noted that the country's high and sustainable economic growth, supported by solid domestic demand, low-level external debt and resilience to external shocks, supported by accumulated foreign exchange reserves, and stable financial system as some of the key factors behind the Philippines' sustained investment-grade credit rating.
According to Philippines News Agency, "Through government-led infrastructure projects, the economy has maintained strong growth driven by solid private consumption and fixed capital formation. High growth is expected to be retained over the medium term," JCR said. "The Marcos Jr. administration is implementing a range of policies aimed at fiscal consolidation, infrastructure development, poverty reduction, and other objectives, with steady progress achieved so far," it added.
In June, JCR affirmed the Philippines' investment-grade credit rating of 'A-' with a 'stable' outlook. An investment-grade rating reflects low credit risk, which helps lower borrowing costs. This, in turn, allows the government to channel more resources toward socially beneficial programs and initiatives.
JCR cited strong loan growth, lower non-performing loans ratio, and capital adequacy ratios that are "well above" both Philippine and international standards. Latest data showed that the capital adequacy ratio of universal and commercial banks stood at 16.5 percent on a consolidated basis. The banks also maintained strong asset quality. Non-performing loan ratio declined to 3.1 percent as of end-July 2025 from 3.6 percent in 2021.
In a statement, the Bangko Sentral ng Pilipinas (BSP) welcomed JCR's assessment on the strength and stability of the Philippine banking system. 'The BSP continues to implement policies that promote robust capitalization and sound risk management among banks. These support financial stability and further build confidence in the domestic financial system," BSP Governor Eli Remolona Jr. said.
JCR's report also noted the country's easing inflation and robust gross international reserves (GIR). Inflation averaged 1.7 percent during the first eight months of the year while GIR reached USD 105.9 billion in end-August 2025. The GIR is equivalent to 7.2 months' worth of imports and 3.4 times the country's short-term external debt.
JCR also said the country's "solid foreign currency liquidity position" will allow it to stay "remarkably resilient" against external shocks. JCR said the attainment of government targets, including higher per capita income, lower poverty rate, expanded domestic employment opportunities, continued infrastructure investment, and structural reforms would have a positive impact on the credit rating. A setback in fiscal reforms, however, will have a negative impact on the credit rating.
