Philippine banks anticipate loan growth, steady NPL outlook

Most foreign and large banks anticipate their NPL ratios to be below 5%.

Banks in the Philippines remain optimistic about their outlook for the next two years, according to the central banks’ banking sector outlook survey released on 26 September 2024.

Respondent banks expect double-digit growth in their assets, loans, deposits, and net income, the Bangko Sentral ng Pilipinas (BSP) said in a report.

Of the respondents, 48.7% anticipate their non-performing loan (NPL) ratio to rise above 5% in the next two years. In contrast, 52.4% of respondents said the same in the previous survey.

Most foreign banks and universal and commercial banks are optimistic, with the former anticipating a less than 1% NPL ratio whilst the latter foreseeing their NPL ratio to settle within the range of 1% to 5%, the BSP said. 

Smaller banking groups are more pessimistic. Majority of thrift, rural, cooperative, and digital banks expect their NPL ratio to be over 5%. 

Restructured loans are projected to make up only a small percentage of total loans, at 2% of total loans.

Banks said that they will focus on corporate and retail lending, with a particular mention of sustainable and green projects; micro, small, and medium enterprises; real estate; and households.

More than half of the banks surveyed said that they are investing in digital transformation.