Banks’ lending

cent since 2012, credit had similarly expanded by 15.1 percent, on average, from 2012 to 2017.

It noted that non-performing loan (NPL) growth was modest during the same period, averaging 6.4 percent, which resulted in a decline in the NPL ratio from 3.0 percent as of end-January 2012 to 1.7 as of end-December 2017.

“As expected, strong economic on lowering the NPL. Conversely, a negative shock to economic growth would have a modest impact on the rise of NPLs, albeit

“Simply put, banks have just not lent more, but lent to capable borrowers as well,” it added.

Moving forward, the central bank emphasized that vigilant monitoring of banks’ lending standards would continue.

“This is as long-standing Basel reforms have ingrained a strong risk management culture in Philippine banks and the recently instituted reforms of Basel III will only serve to reinforce that culture,” it said.

The BSP also pointed out that it would continue efforts to strengthen risk governance via forthcoming reforms such as - the Internal Capital Adequacy Assessment Process/Supervisory - pected to foster prudent lending.

“Moreover, the recently launched BSOS (Banking Sector Outlook Survey) serves as a complementary tool in validating the risk assessments of banking supervisors, as well as act as a proactive and forwardlooking measure,” it added.