The Bangko Sentral ng Pilipinas (BSP) has implemented temporary regulatory relief for banks, allowing them to exclude valuation losses on peso-denominated government securities measured at fair value through other comprehensive income from capital ratio computations, according to Philstar Biz.
Moody's Ratings warned that this relief is credit negative for banks, as it reflects rising pressure from higher bond yields and unrealized losses on investment securities. The measure may help cushion capital ratios from market volatility but signals underlying risks.
The credit ratings agency noted that the exclusion of valuation losses from capital calculations is a temporary fix that does not address the fundamental strain on bank balance sheets. The BSP's move comes amid a challenging interest rate environment.