Published May 27, 2021, 6:29 PM
Philippine banks are more vulnerable to physical climate risks because of the country’s insufficient infrastructure, said Moody’s Investors Service.
In a report (“Banks – Asia-Pacific: Climate risks are growing, with large, diversified banks better positioned to cope”), Moody’s said physical climate risks “are a source of substantial economic losses in Asia-Pacific” particularly in the Philippines which has a “weak” infrastructure.
Other countries in the region that are vulnerable to physical climate risks are Vietnam, Indonesia, Bangladesh and India. However risks are low to moderate for developed economies such as Japan, Korea and Australia.
“Asia-Pacific economies with weak infrastructure are particularly vulnerable to physical climate risks, which can hurt banks’ asset quality because a natural disaster can damage borrowers’ assets or disrupt their cash flow. Many banks in the region also face asset risks from large exposures to sectors susceptible to carbon transition risks,” said Moody’s Vice President and Senior Credit Officer, Alka Anbarasu.