Philippine banks are expected to achieve pre-COVID-19 pandemic profitability this year, S&P Global Ratings (S&P) stated in a report on Wednesday.
In its report, S&P said that Philippine banks’ return on assets or profitability “will edge closer to the pre-pandemic level of 1.2% as credit costs continue to moderate.”
“Profitability of Philippine banks is set to return to pre-pandemic levels as the economic recovery gains momentum,” it said.
The Philippine economy expanded by 7.7% in the fourth quarter of 2021 on the back of renewed growth in consumption and investments.
This brought the full-year GDP growth to 5.6%, surpassing the government’s target of 5% to 5.5% and reversing the recession in 2020.
S&P added that credit growth will pick up to 5% to 7%, “supported by the economic recovery and improving business and consumer sentiments.”
Philippine banks’ asset quality will also stabilize “because banks have recognized the bulk of weak loans from COVID-19 fallout,” according to S&P.
“Comfortable capitalization and stable funding profiles will underpin banks’ credit profiles,” it added.
The credit watcher, however, cited three key risks for Philippine banks, such as the COVID-19 resurgence that derails economic recovery, a rapid rise in interest rates, and property market disruptions.
S&P noted that its report does not constitute a credit rating action. — VBL, GMA News
Philippine banks to return to pre-pandemic profitability in 2022 — S&P
Source: News Panda Philippines
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