The Bangko Sentral ng Pilipinas this month lifted benchmark rates anew to fight inflation and lend some strength to the weakening peso. Key rates now stand at 4 percent for the overnight lending rate, 3.5 percent for the overnight reverse repurchase rate and 3 percent for the overnight deposit rate.
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'Stable' Philippine banking sector seen benefiting from high interest rates
Ian Nicolas Cigaral (philstar.com) - June 28, 2018 - 9:32pm

MANILA, Philippines — The Philippine banking sector is expected to remain on strong footing and could benefit from rising interest rates, global debt watcher Moody’s Investors Service said Thursday.

“We continue to have a stable outlook on the Philippine banking system. I think what driving the stable outlook is that macro conditions continue to be robust,” Moody’s Vice President — Senior Analyst Simon Chen said in a media roundtable.

Chen said Moody’s expects a loan growth of “between mid to high single digit” which is “quite a good number” for the Philippines. Banks’ revenue growth prospects will continue to be strong this year, he added.

“I think what has changed from last year is that loan growth continues to be strong. Secondly, we do think the banks will benefit from rising interest rates environment,” Chen said.

The Bangko Sentral ng Pilipinas this month lifted benchmark rates anew to fight inflation and lend some strength to the weakening peso. Key rates now stand at 4 percent for the overnight lending rate, 3.5 percent for the overnight reverse repurchase rate and 3 percent for the overnight deposit rate.

Central Bank Governor Nestor Espenilla has said the back-to-back rate hikes won’t immediately affect consumer loans, as market competition might prompt banks not to follow the increased borrowing rates.

Meanwhile, Chen said “gradual” rate hikes will help borrowers weather rising interest rates.

“We do think that the rate increases will be gradual and modest so the adjustment to higher interest rates within the households and corporate... will be very manageable,” he said.

Data from the BSP show the banking system booked an annual asset growth of 11.6 percent to P15.2 trillion last year on account of 16.4 percent loan expansion to P8.9 trillion. Net profit went up by 9.0 percent to P167.6 billion. 

The BSP also said banks are making progress in expanding their geographic footprint, as well as taking advantage of opportunities from utilizing digital technology in financial transactions.

"There’s a lot of space for banks to grow. Growth opportunity is there," Chen said.

MOODY'S INVESTORS SERVICE PHILIPPINE BANKING SYSTEM
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