The domestic banking industry is expected to remain stable in the next two years as the economy’s sustained resilience amid the domestic and external headwinds will translate into more loans and deposits, a Bangko Sentral ng Pilipinas official said Wednesday.
BSP director for supervisory research and policy department Maria Cynthia Sison said during the 4th Regional Macroeconomic Conference Series online briefing that the strength of Philippine banks in 2022 would likely continue in the succeeding years.
She said banks could post a “double-digit growth in assets, deposits and net income” in the next two years as the gross domestic product is expected to grow above 6 percent in the same period.
Sison said the non-performing loan ratio could also improve to a manageable 2 percent to 3 percent in the next two years. NPLs or soured loans pose risks to the asset quality of banks as borrowers are likely to default on their debts.
The government earlier projected a 6-percent to 7-percent economic expansion this year, slower than what was expected for 2022, on continued risks emanating from the external front such as higher interest rates, slowdown in major economies and continuing Ukraine-Russia war.
Annual growth is expected to pick up in 2024 to 2028 at 6.5 percent to 8 percent, as the government pushes for strategies and interventions under the Philippine Development Plan 2023 to 2028.
Sison said the banking system’s performance would continue to be supportive of economic growth going forward.
She said latest data showed the industry’s assets expanded by 8.9 percent year-on-year to P22.2 trillion of as end-November 2022. Total deposits increased 7.4 percent to P17 trillion.
“Banks’ assets are funded mostly by deposits. This means that banks continue to maintain the trust and confidence of the public,” Sison said.
Loans also climbed 10.1 percent as of end-November 2022 to P12.2 trillion from the same period in 2021. These were mostly extended to productive sectors of the economy such as manufacturing, financial and insurance, whole and retail trade, households, among others.
Banks’ non-performing loan ratio stood at 3.3 percent as of end-November 2022.