Philippine banks report “generally strong” loan growth in Q4

Some major banks’ saw dramatic rises in NPL ratios.

Philippine banks logged a “generally strong” loan growth in Q4 2024, driven by capital expenditure revival, according to CreditSights.

Most banks reported a 6% to 9% growth quarter-on-quarter (QoQ) except for BDO, Union Bank of the Philippines, and Philippine National Bank (PNB).

Net interest margins (NIM) were a mixed bag in Q4 due to central bank rate cuts that started in August.

Asset quality of first-tier banks was stable quarter-on-quarter and have started to reflect the increased consumer lending in FY2024.

Notably, the Bank of the Philippine Islands (BPI) reported a non-performing loan (NPL) ratio of 2.13%, 29 basis points (bp) higher than Q4 2023.

Metrobank, meanwhile, saw credit costs tick up by 62 basis points in the second half of the year.

Most of the second-tier banks continued to show weaker asset quality due to their growth pace and direction as we have earlier forewarned, according to Credit Sights.

RCBC’s NPL ratio rose 57 bp QoQ. Credit costs of both RCBC and UBP spiked by over 100 bp in Q4. Security Bank’s credit costs were more contained at 98 bp.

CET1 ratios remain comfortable at BDO, MBT, UBP and PNB, but have been worn by brisk RWA growth at BPI (13.8%), RCBC (13.5%) and SECB (12.9%) as we had largely anticipated; liquidity metrics remain comfortable across the banks.