Banks in the Philippines exhibit relatively low exposure to credit risks arising from recent US tariff increases, according to Moody’s Ratings. The credit assessment agency stated in a report dated April 7 that the impact of these tariffs on Philippine banks is “low” within the Asia-Pacific (APAC) region.

This limited impact is attributed to the Philippines’ moderate trade engagement with the United States and its reasonably diverse economy.

Moody’s identified the Philippines as having the lowest additional US tariff. The country is on the list with Australia, New Zealand, Hong Kong, Singapore, and Mongolia. Consequently, banks in these economies are anticipated to experience the least negative effects from direct tariffs.

While the Philippines saw a 17% increase in US tariffs, exports to the US represent only 2.9% of the country’s gross domestic product. This figure is among the lowest in the APAC region. Moody’s suggests that this minimal exposure protects local banks from increased loan risks that could stem from a slowdown in exports.

Conversely, Moody’s anticipates that banks in Vietnam, Thailand, and Bangladesh will face the most significant credit challenges. This heightened risk is due to these countries’ greater reliance on exports to the US.

These nations also experienced substantial tariff increases, with Vietnam at 46%, Thailand at 36%, and Bangladesh at 37%.

Moody’s noted that the primary impact on loan quality in these countries will likely fall on small and midsize enterprises. These enterprises possess limited financial reserves to adapt to rapidly changing economic and trade conditions.

The Philippines currently holds a Baa2 stable credit rating from Moody’s, which is one notch above the minimum investment grade. This rating reflects the country’s stable fiscal position and its capacity to withstand external economic pressures.

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