BSP survey: PH banks see bright horizon amid dark global recession clouds

The Philippine banking industry remained optimistic about the country’s economy amid signs of a global recession just lurking around the corner, according to results of a survey by the Bangko Sentral ng Pilipinas (BSP).

In a statement, the BSP said majority of respondents in the semi-annual poll, “Banking Sector Outlook Survey,” saw gross domestic product to grow between 6 and 7 percent in the next two years.

“Outlook on the Philippine banking system remains stable,” said the BSP on the survey results.

Most respondents projected double-digit growth “in assets, loans, deposits and net income,” the BSP said.

The outlook was “bullish,” or rosy, which indicated that “banks will continue to provide an environment conducive to sustained domestic economic growth,” the BSP added.

Expecting what economists termed as headwinds, respondents planned to keep risk-based capital and liquidity well beyond domestic and global standards, according to the survey results.

High-quality common equity, or “Tier 1” resources, would dominate bank capital.

Projections on Basel liquidity metrics of liquidity coverage ratio (LCR), in which banks are required to keep cash or liquid assets enough for cash flow of 30 days, were seen to provide ample short-term and long-term funding to withstand market ups and downs.

These LCR projections would also help banks take advantage of opportunities provided by the growing Philippine economy.

In terms of financial products or services, majority of the respondent banks stuck with corporate and retail banking as priority, followed by payment services.

A section of the survey on financial technology and cybersecurity plans underscored the banking industry’s aptitude on technology-based solutions and a strong interest in swimming in the pool of digital finance ecosystem.

Technology was expected to add more push to the growth and efficiency of banks.

The report also noted that most banks planning or already employing technology in their operations find their most important application in areas of data security and privacy, know-your-customer procedures and loan scoring.

“Moreover, most of the respondent banks revealed preparedness in managing cybersecurity risks,” the BSP said.

Institutional risk was considered as the top concern of bank operations which included cybersecurity threat, regulatory or compliance risks, credit risks and market competition.

The BSP said respondents were ready to tighten “risk management systems to strengthen banks against potential shocks and external vulnerabilities.”

According to the survey, banks also recognized the need to keep a high level of risk-based capital and liquidity and strengthen organizational behavior and risk culture to thrive.

Edited by TSB