Tough year for banks

Fitch Ratings yesterday reported that banks will have a tough year this year, with lower profits and higher loan defaults. Fitch in its latest report Banks in Asia (Excluding Japan): Outlook for 2009 reported that bad loans have not been disposed as fast as it should have been. It said that from 2002, foreclosed assets have reached P200 billion.

It said that should all these assets be written off bank capital would be impaired by an average of 40 percent. Several weaker banks will be devastated with as much as 80 percent of capital impaired.

Fitch however noted that for many years until 2005, loan demand was weak with bank funds parked at riskless government borrowings.

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