Despite slowdown in global economic activity, Philippine banks maintain a positive outlook for the next two years and expect to post double digit growth in assets, loans, deposits and net income, despite high inflationary environment.
The survey of Bangko Sentral on the Banking Sector Outlook for the first semester of 2022 showed banking industry leaders feeling buoyant amid the global slowdown and increasing commodity prices in the first half of 2022 following the tightening in global financial conditions and the ongoing tensions in Russia and Ukraine.
Survey respondents include presidents, chief executive officers, country managers of all universal and commercial banks (U/KBs) and thrift banks, 80 rural and cooperative lenders, and two digital banks that account for 97 percent of the total assets of the banking industry as of end-December 2021, the survey indicated.
Respondents were asked about their growth outlook, risk assessment, and business strategies within a two-year period. The survey is part of the BSP’s surveillance toolkit to help improve the banking system’s resilience,
“Majority of surveyed banks shared a stable outlook of the banking system in the next two years. This optimism was coupled with expectations of double-digit growth in assets, loans, deposits, and net income,” the BSP said.
However, the latest survey showed about 67.9 percent of banks see a stable banking system, which is lower than the 76.3 percent in the previous survey. This could be because of the collapse of the US banks—Silicon Valley Bank and Signature Bank in recent weeks.
Around 32.1 percent of the banks expect a stronger sector in the next two years, significantly more than the 5.4 percent in the prior survey.
None of the respondent banks forecasted a weaker banking system for the two-year period.
Most lenders expect their assets to grow between 10 percent and 15 percent, while digital banks projected asset growth up to more than 20 percent.
“The expansion in bank assets was expected to be largely in the form of credit growth to further support the country’s financing needs,” the central bank said.
About 78.9 percent of banks anticipate double-digit growth in their loan portfolio for the next two years, higher than the 72.7 percent seen in the prior survey.
Universal banks surveyed said they would want to focus on the manufacturing, wholesale and retail trade, and consumer finance sectors in the next two years.