PHL banks still upbeat despite headwinds–BSP survey
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LIGHT MOMENT AT ROTARY MEET Former Secretary of National Defense Maj. Gen. Delfin Lorenzana shares a light moment with Rotary Club of Manila President Eduardo “Jujut” Enriquez III during a luncheon in Makati City, where Lorenzana was the guest speaker. NONIE REYES
HILIPPINE banks are optimistic about 2024 and 2025 as more expect a double-digit growth in net income and lower non-performing loan ratios, according to the latest data released by the Bangko Sentral ng Pilipinas (BSP). Based on the results of the 2023 Ba n k ing Sector Out look Sur vey (BSOS), BSP data also showed there is more optimism in the growth of assets, loans, and deposits for 2024 and 2025. The data also showed 34.7 percent in 2023—up from 32.1 percent —project a stronger banking system for 2024 and 2025. However, those who expect a stable banking system
declined to 64.6 percent in 2023 from 67.9 percent in 2022. “Banks’ overall outlook remains upbeat amid macroeconomic concerns brought about by persistently high global and domestic inflation, and uncertainty in the global economic and geopolitical environment in 2023. There has been a noted shift in sentiment towards a stronger banking system outlook,” the report stated. Based on the data, majority of respondent banks or 76.5 percent disclose double-digit growth in net income in the next two years. However, this is lower than the 77.9 percent recorded in 2022. A ll digital banks (DGBs) view
growth in their net income to be higher than 30 percent; while 53.3 percent of universal and commercial banks (UKBs) are more conservative in their estimates, projecting a net income growth rate of between 10 and 20 percent. “Profitability prospects remain encouraging on the back of a highinterest-rate environment and improving macroeconomic conditions,” BSP said in its report. The data also showed the percentage of respondent banks that project their non-performing loan (NPL) ratio to exceed 5 percent in the next two years declined to 48.7 percent from 52.4 percent.
The report stated that the remaining 29.4 percent expect their NPL ratio to settle at below 3 percent and 21.9 percent, between 3 and 5 percent during the next two years. Across banking groups, the data showed 84.6 percent of UKBs estimate their NPL ratio to settle between 1 and 5 percent, while the remaining 15.4 percent post higher NPL ratio projections of greater than 5 percent. For thrift banks (TBs), rural and cooperative banks (RCBs), and DGBs, majority foresee their NPL ratio to be over 5 percent, relatively similar to the 2022 BSOS. See “PHL,” A2
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ON MIDEAST TENSIONS By Cai U. Ordinario
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FOREIGNERS’ SHOPPING SEEN AIDING TOURISM REBOUND
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he Asian Development Bank (ADB) is closely monitoring the situation in the Middle East given its impact on oil-dependent countries in Asia like the Philippines. In an email to the BusinessMirror, ADB Philippine Country Director Pavit Ramachandan said “any escalation of tensions” in the Middle East have the potential to increase prices and affect “overall economic stability” in the country. Ramachandran noted that higher oil prices would have an impact on transportation and electricity costs as well as food prices. “Any escalation of tensions in the Middle East could disrupt global oil production and lead to a spike in oil prices, which would directly affect inflation in the Philippines, given its heavy reliance on imported energy,” Ramachandran said. “We are closely monitoring the situation, as it could potentially impact inflation and overall economic stability,” he also told the BusinessMirror. R a m ac h a nd ra n sa id a nu mber of risks are mentioned in the latest Asian Development Outlook (See: https://businessmirror.com. ph/2024/09/26/adb-keeps-gdp-forecastfor-phl-but-warns-of-risks/) but what is crucial is the government’s policy responses. These policy responses and programs should help mitigate these risks, as many of them can impact the country through various channels. One risk, severe weather conditions, could cause inflation to spike, damage infrastructure, and disrupt livelihoods. Ramachandran also said this could lead to volatility in global commodity prices and supply chain disruptions. “Given these, what is essential are effective policy responses and programs to mitigate these risks. These See “ADB,” A2
By Ma. Stella F. Arnaldo @akosistellaBM
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Special to the BusinessMirror
HE Senate has approved on third and final reading the proposed legislation that will refund value-added taxes (VAT) paid by foreign tourists on their purchases made in the Philippines. The measure, embodied in Senate Bill No. (SBN) 2415, or “An Act Creating a Vat Refund Mechanism for Non-Resident Tourists,” amends the National Internal Revenue Code of 1997, and gives foreign tourists VAT refunds on their local purchases that amount to at least P3,000, with the addition of a Section 112-A. See “Foreigners,” A2
Bill amending rice tariff law awaits Marcos signature
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HE bill amending the existing Rice Tariffication Law (Republic Act 11203) is now awaiting the signature of President Ferdinand Marcos Jr. This after the House of Representatives and the Senate separately ratified the bicameral conference committee report on Wednesday, just before adjourning for their scheduled recess until November 4. With both chambers having already ratified the mea-
sure, it is now ready to be sent to Malacañang for the President’s approval to officially become law. The proposed amendments aim to extend the Rice Competitiveness Enhancement Fund (RCEF) for another six years, until 2031, as it was originally set to expire this year. The annual budget for the fund will also be increased from P10 billion to P30 billion. See “Bill,” A2
ECONOMY SCALING UP Construction workers navigate scaffolding on a rising skyscraper along Macapagal Avenue. The Asian Development Bank (ADB) forecasts continued economic expansion for the Philippines, driven by broad-based domestic demand. The country’s economy grew by 6.3 percent in the second quarter amid a construction boom. “Most of the ingredients for the Philippines’s sustained economic growth are in place—rising government revenues are boosting public expenditures on infrastructure and social services, increasing employment is driving consumption, and reforms to open the economy to more investments are underway,” said ADB Philippines Country Director Pavit Ramachandran. NONIE REYES
PESO exchange rates n US 55.9060 n japan 0.3864 n UK 74.4836 n HK 7.1817 n CHINA 7.9480 n singapore 43.4120 n australia 38.1614 n EU 62.2513 n KOREA 0.0419 n SAUDI arabia 14.9011 Source: BSP (September 26, 2024)