MANILA, Philippines — Sy-led BDO Unibank Inc. is cautious about 2024, but projects a decent 2023 as the Philippines continues to emerge from the impact of the COVID pandemic.
BDO president and CEO Nestor Tan said the banking sector did well this year on the back of rising interest rates after the Bangko Sentral ng Pilipinas (BSP) delivered aggressive rate hikes.
The BSP has raised key policy rates by 450 basis points since May last year to tame inflation and stabilize the peso.
“If you look back into 2023, we have a lot to be thankful for, especially as we’re getting out of the pandemic and it looks like we’re successful in getting out,” Tan said.
However, Tan said, growth remains below the industry’s expectations.
“Unfortunately, for us, growth has not been what we expected,” he said.
According to Tan, growth is a little bit anemic after slowing to 0.6 times of gross domestic product (GDP) from what used to be 1.5 to 2.5 times of GDP.
“So, looking into 2024 we look at it cautiously because we don’t know what will happen next. Rates are stabilizing, which is good. That brings us to the end of the spread expansion and growth,” he said.
The bank president said credit growth remained in the mid single-digit level at 7.1 percent in October, ending six straight months of slow down.
“So, it is now as rosy as it was before,” Tan said.
He pointed out that non-performing loans (NPLs) have stabilized.
Tan admitted 2023 is a decent year for BDO. “I think for the bank, BDO, 2023 is a decent year. It is actually a good year, but we remain cautious for 2024,” he said.
Meanwhile, BDO chairperson Teresita Sy-Coson urged the Philippines to peacefully resolve flaring tensions in the South China Sy.
Sy-Coson, who is also vice chair of SM Investments Corp., encouraged the government not to be hostile toward its neighbor.
“China is very close to us, we cannot be too antagonistic… Even though we know what is happening, I guess we have to do it through a more peaceful negotiation,” Sy-Coson told reporters.
“That’s why we are all cautiously optimistic because of the things that are happening beyond the businesses’ control,” Sy-Coson said.
The SM Group has existing businesses in China.