PH banks to post healthy growth in ’14, says BSP

The local banking sector is expected to keep growing at a healthy pace this year as the country’s growing economy fuels demand for loans for businesses and households.

The Bangko Sentral ng Pilipinas (BSP) said the level of banks’ bad loans, which is already at record lows, should continue to improve as lenders maintain prudent credit standards despite brisk demand.

“We see the healthy growth in bank credit continuing. Our credit-to-gross domestic product (GDP) still is one of the lowest among our neighbors,” BSP Governor Amando M. Tetangco Jr. said.

Data from the World Bank showed that loans in Malaysia was at 117 percent of GDP at the end of last year. Singapore’s credit-to-GDP stood at 120.6 percent. The Philippines’ credit-to-GDP was significantly lower at 33.4 percent.

Tetangco said the low level of loans in the country meant that higher growth rates in bank lending could be expected.

Latest data from the BSP showed that outstanding loans held by the country’s universal and commercial banks grew by 16.4 percent in December, accelerating from November’s 14.8 percent.

Amid the rosy outlook for loan growth, Tetangco urged banks to accelerate lending to productive sectors of the economy to support investments and job creation.

“It is our hope that our banks would mobilize their capital toward projects that will create … more jobs and opportunities,” he said.

As banks keep lending prudently and with higher income levels allowing companies and consumers to more easily repay their loans, the BSP said the asset quality of banks would continue to improve.

The nonperforming loan (NPL) ratio of major banks as of October 2012 stood at 2 percent, reflecting a nominal improvement from the 2.05 percent of the previous month.

“The asset quality of banks is already at historic lows. The lending standards of banks based on our survey remain prudent. Therefore, we expect the system’s asset quality to remain fairly stable,” Tetangco said.

Results of the BSP’s quarterly survey showed 86.7 percent of the country’s major banks have kept lending standards “basically unchanged” in the October to December period of the year.