Bank presidents, CEOs bullish on industry outlook

Bank presidents and CEOs are bullish about the outlook for the country’s banking system amid the projected five to seven percent gross domestic product (GDP) growth for the Philippines over the next two years.

The maiden report on the Banking Sector Outlook Survey (BSOS) of the Bangko Sentral ng Pilipinas (BSP) showed nearly seven of 10 respondents or 66.7 percent consider a stable outlook for the Philippine banking system, while three out of 10 or 33.3 percent see a stronger industry over the next two years.

“The stable outlook for the banking system can be attributed to the strong macroeconomic fundamentals, adequate liquidity, and rising capital buffers of banks,” the BSP stated in the report.

Likewise, the regulator added the upgrade of the Banking Industry Country Risk Assessment (BICRA) of the Philippines to Group 6 from Group 7 by S&P Global Ratings amid improved credit fundamentals through the establishment of credit bureaus and improvement in the underwriting practices of the consumer loans segment contributed to the positive outlook.

The bank presidents and CEOs expect assets, total loan portfolio, and earnings to grow between 10 percent and 20 percent over the next two years as well as a below 10 percent net interest, return on equity, non-performing loan, and leverage ratios.

More than eight of 10 or 83.3 percent of the respondents mentioned that corporate, particularly micro, small, and medium enterprises (MSMEs), and retail lending would be their top most priority.

As part of their strategies, the bank executives identified three strategic priorities including growing the bank, optimization of available technology, and protecting the bank.

About 43 percent of the respondents vowed to prioritize available technology through digital operations and customer service and to leverage on financial technology for strategic efficiency in the next two years.

The respondents also vowed to protect the bank by managing reputational as well as operational risks, enhancing data and cybersecurity, upholding consumer protection, and boosting capital and liquidity ratios.

More than seven of 10 respondents or 71.1 percent said they plan to use technology in their banking transactions over the next two years.

“The results of the survey also show that majority of the banks use technology to address operational performance, internal controls, risk management, business continuity, compliance, customer experience, and client-based expansion,” the BSP said.

The survey covered 114 president, CEOs, and country managers of all big and midzed banks as well as the top 20 rural and cooperative banks. It aims to serve as a measure of proactive and forward-looking approach to surveillance and financial supervision.