‘Corporate sector to rebound this year’
The Bangko Sentral ng Pilipinas (BSP) reiterated on Thursday that it would support the country’s recovery from the coronavirus pandemic as it projects the corporate sector to rebound this year and the next.
“The BSP reaffirms its commitment to complement the national government’s broader initiatives to mitigate the adverse effects of this pandemic on the Philippine economy,” BSP Governor Benjamin Diokno told reporters during a virtual briefing.
“The corporate sector is expected to bounce back in 2021 and 2022, along with the recovery of the Philippine economy,” he said.
According to the central bank chief, the global health crisis resulted in a notable decline in corporates’ ability to sustain operations and generate profits.
Of the 256 firms listed on the Philippine Stock Exchange (PSE) that filed income reports as of end- September, 178 firms or 70 percent posted reductions in operational performances quarter-on-quarter. Of these, 97 incurred net losses in the third quarter.
These losses were reported mostly by firms in the mining sector (16 of 24), followed by those in the services sector (29 of 59), holding firms (16 of 39), industrial sector (19 of 62), property sector (10 of 26), and financial sector (six of 29).
“For banks, the crisis translated to subdued lending to productive sectors of the economy,” Diokno said, noting that firms’ weakening ability to pay debts quickly raised the banking industry’s nonperforming loan (NPL) ratio to 3.6 percent in the fourth quarter from 2.3 percent in the first, before the pandemic started.
He said the Bangko Sentral “supports the sector indirectly by providing an environment where there is ample liquidity for lending, and where banks are able to intermediate funds efficiently, at a low and stable interest rate.”
The BSP’s role has been to ensure the proper functioning of credit and financial markets, and that there is sufficient liquidity to support domestic demand, the central bank governor added.
“Combined monetary and financial sector policy actions simply reflect the ‘whole-of-government’ approach to address the effects of the pandemic,” Diokno said.