Banks see 6-7% PH growth – BSP poll
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Thu, 28 Nov 2019 16:50:47 +0000
BANKS continue to see the Philippine economy growing in line with the government’s target within the next two years, results of a poll conducted by the Bangko Sentral ng Pilipinas (BSP) showed.
AFP
“Banks maintain their optimism on the country’s economic prospect amid global uncertainties and market volatilities during the first semester of 2019,” the BSP said in its “Banking Sector Outlook Survey” (BSOS) report released on Thursday.
It said that 83.5 percent of the BSOS respondents projected the Philippine gross domestic product (GDP) shall grow between 6 percent and 7 percent within the next two years.
For 2019, the government revised downward its GDP growth target to 6–7 percent. It aims for this growth to settle within the 6.5 to 7.5-percent range for 2020.
Banks’ bullish economic outlook also translated to continued confidence on the stability of the banking system.
The central bank disclosed that 45.9 percent of the industry leaders projected stronger banks in the next two years, while 52.9 percent of the respondents expected the banking system to remain stable.
“The projected economic growth and strength of the banking system influenced 73.5 percent of the survey respondents to forecast double-digit growth in the banks’ assets,” it added.
But the BSP emphasized that the percentage of respondents that forecast double-digit growth in the banks’ assets was lower compared to the 80.0 percent projection a year ago.
Lenders also expect growth in assets to be driven by credit expansion as 82.9 percent of the banks projected double-digit growth in their loan portfolio for the current survey.
The BSP explained that this was relatively stable compared to the 83.6 percent of banks that projected double-digit loan growth in the BSOS for the first semester of 2018.
“The BSOS results were likewise consistent with banks’ expectations for deposits to fund asset and loan growth,” it said.
In fact, the central bank highlighted that 69.9 percent of the current survey respondents projected double-digit deposit growth, although muted compared to 83.6 percent of the respondents during the same period last year.
“The banks’ optimism on the economy and the bullish operational projections likewise elicited upbeat expectations on returns as 88.0 percent of the respondents for the first semester of 2019 forecast double-digit net income growth for the next two years compared to 83.3 percent of the respondents during the first semester of 2018,” it added.
Meanwhile, the BSP mentioned that sluggish global growth may be exerting pressure to the quality of loan portfolio.
“This may be seen from the increase of respondents expecting the ratio of nonperforming loans to total loans to exceed 3 percent from the 54.4 percent during the maiden conduct of the BSOS to 66.7 percent for the current survey,” it said.
Liquidity, on the other hand, is expected to be maintained in the medium term as banks continue to project healthy liquidity metrics.
“Liquidity serves as buffer for banks to thrive amid a volatile market environment while enabling them to take advantage of business opportunities presented by the growing economy and the country’s pursuit of better infrastructure to support domestic economic expansion,” the BSP added.