Banking sector upbeat on near-term prospects

Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)

Banks in the Philippines maintained a positive growth outlook and are expecting double-digit expansion rates over the next two years, based on the latest semestral survey of industry leaders by the Bangko Sentral ng Pilipinas (BSP), which covered the second half of 2021.

The Banking Sector Outlook Survey (BSOS) engaged presidents, chief executives and country managers of 150 universal and commercial banks or UKBs, and 80 rural and cooperative banks.

Results show that, overall, the Philippine banking system is upbeat with regards to prospects for assets, loans, deposits and net income.

The survey found that in terms of loan quality, fewer respondents—57 percent from 64 percent previously—estimate a nonperforming loan (NPL) ratios of above 5 percent in the next two years.

Meanwhile, 42.7 percent of respondents project an NPL coverage ratio in the range of 51 percent to more than 100 percent.

Also, banks have mixed projections regarding restructured loans as 30 percent of respondents estimate a restructured loan ratio of more than 5 percent. This represents up to 10 percent of the loan portfolio for small banks.

On the other hand, about 23 percent of respondents predict a more conservative restructured loan ratio of between one percent and 2 percent.

“This reflects continued efforts of banks to grant financial relief to their borrowers through modifications in their loan payment terms,” the BSP said.

Further, banks in the Philippines intend to maintain risk-based capital, leverage and liquidity ratios at levels higher than domestic and global standards to promote institutional stability.

—RONNEL W. DOMINGO INQ