Moody’s sees strong loan growth in PH

Bank lending growth in the Philippines will continue to outpace the rest of the region given the strong demand from both businesses and households, even as financing becomes more expensive in the coming months.

Debt watcher Moody’s Investor Service, which has a “stable” outlook for Philippine banks, said the domestic economy’s bright prospects would drive loan demand.

“We expect the credit profiles of the Philippine banks to remain stable over the next 12 to 18 months, supported by steady domestic economic growth,” Moody’s vice-president and senior analyst Simon Chen said in a report released this week.

The stable outlook for banks means credit ratings for these institutions will likely stay the same for the next year and a half. Last year, Moody’s had a “positive” outlook for local lenders, but most of these institutions have earned rating upgrades since then.

Although credit expansion is moderating after government-implemented measures to curb excessive risk-taking, Moody’s said outstanding bank loans would continue to grow by 14 to 16 percent over the next 12 to 18 months. This would be slower than the 19-percent growth recorded in 2014.

Increases in property prices remain in line with economic growth, and in Moody’s view the Philippines can support a relatively fast pace of loan growth in under-penetrated sectors without experiencing excessive asset risks.

The system-wide loan-to-deposit ratio was 63 percent as of September 2015, a level that is low by global and regional standards.

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