Philippine banks’ costs to rise; Singapore lenders face slower profit growth

Singapore banks’ net interest margins have already peaked in 2024.

Philippine banks will see credit loss stay flattish and earnings moderate over the next two years. Credit growth could improve, but costs may rise, said Nikita Anand, primary credit analyst for S&P.

“The rising share of higher-risk (and higher-yielding consumers loans is likely to lead to a manageable deterioration in the nonperforming loan ratio,” Anand said, adding that large corporate– which form the bulk of the banking sector’s loan portfolio– should remain resilient.

“Banks with higher exposure to unsecured loans could see elevated credit costs as the portfolio matures,” Anand said.

Philippine banks have maintained adequate provisioning, and credit growth may rise as high as 12% between 2024 and 2025 amidst higher economic growth. The Philippines’ GDP is expected to grow 6.2% in 2025, faster than the 5.7% in 2024.

For Singapore, the banks’ net interest margins (NIM) have already peaked in 2024, which equates to dampened profit growth for the next 12 months.

“Singapore banks’ profitability is more sensitive to margins rather than loan growth. The pickup in volumes can mitigate, but likely not offset, the slowdown in profit growth,” S&P primary credit analyst Ivan Tan said in the same report.

Singapore banks’ NIMs are expected to moderate by about 10 basis points to 15 basis points over 2025-2026.