Banking execs expect 5-7% PH growth – BSP
Bank executives remain optimistic about the Philippine economy but most expect growth, at best, to only hit the bottom end of the government’s target.
“Majority (76.3 percent of respondents) of bank executives expect the economy to grow by 5 to 7 percent in the next two years across the banks surveyed,” the Bangko Sentral ng Pilipinas (BSP) said on Wednesday, citing the results of its maiden Banking Sector Outlook Survey.
The government is targeting 7.0-8.0 percent gross domestic product (GDP) for this year up to 2022. Growth as of the first half of 2018 remained below this at 6.3 percent.
“The forecast economic growth is expected to further improve the respondent banks’ asset quality, liquidity, solvency, and profitability,” BSP said of the executives’ outlook.
It said that 66.7 percent of the respondents expected the banking system to remain stable, with the remaining 33.3 percent even more optimistic as they forecast the sector to strengthen in the next two years.
The positive outlook was attributed to the country’s strong macroeconomic fundamentals, adequate banking liquidity and rising capital buffers, and an industry risk assessment upgrade by S&P Global Ratings.
In upgrading the banking system’s credit rating, the central bank noted that S&P had pointed to the sector’s “improved credit fundamentals, in particular, the establishment of credit bureaus and improvement in the underwriting practices of the consumer loans segment.”
The industry survey, meanwhile, also revealed that banks’ products and services were focused on corporate and
retail banking. Banks were also positioning to take advantage of financial technology to grow their businesses.
The majority, or 78.1 percent of the respondents, said their respective banks were finding it difficult to comply with mandatory lending to the agri-agra and micro, small and medium enterprises sectors.
Also, 37.3 percent said they were finding it hard to comply with the BSP’s anti-money laundering requirements and regulations.
“In the same manner, the respondents also view credit risk management and other areas of risk management as most challenging in terms of compliance with BSP’s existing rules and regulations,” the central bank said.
The survey covered all universal/commercial and thrift banks and the top 20 rural/cooperative banks in terms of total loan portfolio.
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