THE Bangko Sentral ng Pilipinas (BSP) reported last Tuesday that the banking industry maintained a positive growth outlook amid lingering local and international challenges, its survey showed.
According to the Central Bank, banking industry leaders shared optimistic views regarding the country’s economic prospects based on the results of the Banking Sector Outlook.
Survey (BSOS) for the second semester of 2021.
“The banks’ level of optimism on the country’s economic prospects is also reflected in their overall outlook for the Philippine banking system [PBS] with expectations of double-digit growth in assets, loans, deposits and net income for the next two years,” the BSP said.
The BSOS aims to provide insights of bank management on the strategic direction of the industry and emerging risks and trends.
“Amid the long tail of the Covid-19 pandemic, the Philippine banking system is projected to withstand the legacy risks and challenges of the Covid-19 pandemic within the next two years on account of its stable and sound capital and liquidity buffers, ample loan loss reserves, good earnings performance and prudent risk governance,” the BSP said.
In terms of loan quality, a lower number of respondents—or around 57.3 percent from 63.5 percent in the previous BSOS—estimate a non-performing loan (NPL) ratio of above 5 percent in the next two years.
By banking group, the topmost NPL ratio projection of universal and commercial banks shifted to between greater than 2 to 3 percent from the greater than 3 to 5 percent tier in the first semester of 2021.
Meanwhile, 42.7 percent of respondents project an NPL coverage ratio in the range of 51 percent to more than 100 percent.
The survey also showed that banks have mixed projections regarding restructured loans as 30.1 percent of respondents estimate a restructured loan ratio of more than 5 percent. By contrast, about 23 percent of respondents predict a more conservative restructured loan ratio of between 1 and 2 percent.
“This reflects continued efforts of banks to grant financial relief to their borrowers through modifications in their loan payment terms. Philippine banks also intend to maintain risk-based capital, leverage, and liquidity ratios at levels higher than domestic and global standards to promote institutional stability,” the BSP said.