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Outlook Positive for PH Banking Market

by: Sarah Joson

Friday, December 18, 2015 |

Rating organization Fitch Ratings recently revealed that the Philippines is the only banking market across the Asia-Pacific region that registered a positive outlook for next year.

Fitch has changed its outlook from positive to stable for two Philippine banks - Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP).

Fitch also released the "2016 Outlook: Asia-Pacific Banks" report and said in an supplementary note that Philippine banks are able to withstand risks from high credit growth over the last couple of years because of the banks’ ability to have healthy funding and liquidity, high capitalization, and adequate loan-loss reserves.

The ratings also stem from concentrated loan books, ownership by large family-controlled conglomerates, and developing corporate standards.
 
Next year, the Philippine economy is seen to grow by 5.9% from 5.6% this year. Growth is said to be anchored on continuous influx of remittances from overseas Filipino workers, and sustained earnings coming from the business process outsourcing industry.

Fitch noted that general interest from foreign banks will be sustained by the positive environment even as competition in the banking sector remains strong. The debt watcher also anticipates a mid-teen loan growth next year especially since the nation’s credit growth has relaxed from 19.1 percent in 2014 to 12.6.

Fitch also said high loan growth could lead to credit excesses and could affect asset quality if not handled properly.

Moreover, profitability is seen to remain stable in 2016 brought on by higher-yielding consumer and middle-market loans are seen to counterbalance the ongoing competitive pressure on net interest margin.

 
Source:
http://www.gmanetwork.com/

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