FSCC affirms Philippine financial system strength amid rising risks

MANILA – The Financial Stability Coordination Council (FSCC) has reaffirmed the strength of the Philippine financial system while flagging concentration risks that could amplify shocks across the economy.

During the council’s quarterly meeting on March 13, 2026, Bangko Sentral ng Pilipinas (BSP) Governor and FSCC Chairman Eli M. Remolona, Jr. said, “The banking system’s resilience is underpinned by strong capital and liquidity.”

The FSCC said it remains vigilant against potential systemic risks. While corporate balance sheets remain sound, the council noted that concentrated corporate exposures could amplify shocks as linkages between large conglomerates and economic sectors increase.

Corporate exposures, specifically non-financial corporations’ leverage exposures, refer to the amount of debt — including bonds and loans across all currencies expressed in PHP — held by non-financial corporations with elevated risk levels.

Concentration risk arises when exposures are overly focused on a single borrower, group, sector, market, or asset class, increasing the potential for significant losses.

Members also discussed increases in corporate leverage, consumer credit, and housing loans. While these reflect economic activity, the council noted that “growth and risk often travel together.”

To address risks from non-bank financial institutions adopting new business models, the FSCC is expanding its surveillance network, improving data quality, and strengthening oversight.

The council also recognized the Philippine Deposit Insurance Corporation (PDIC)’s efforts to refine its early intervention frameworks to address bank distress swiftly and help preserve public trust and financial stability.

The FSCC is composed of the BSP, the Department of Finance, the Securities and Exchange Commission, the Insurance Commission, and the PDIC.

The council reaffirmed its commitment to working with market stakeholders to maintain a sound and agile financial system.