The Effects of the Pandemic on the Listed Philippine Banks’ Financials

Abstract

This study examined the effects of the pandemic on the operating performance and financial position of listed Philippine banks. Their major sources of revenues, interest rates on loans and deposit liabilities, impairment losses, and operating expenses in 2020 and 2021 were evaluated vis-à-vis the five-year data prior to the COVID-19 outbreak. The impact of the pandemic on the banks’ asset mix, loans to deposit ratios (LDR), liquidity coverage ratios (LCR), net stable funding ratios (NSFR), and capital adequacy ratios (CAR) were likewise assessed over the same period. While the banks were adversely affected by the pandemic, the impact
was not as severe as the other industries. Because of the banks’ aversion to lending and borrowers’ higher demand for credit facilities during the period, the LDRs went down, but the average net interest margins went up in 2020. It is also interesting to note that the averages of the banks’ capital adequacy ratios were higher during the pandemic years.