Staying the course, steering the future

(This is a speech given by Mr. Bernardo before the Bankers Institute of the Philippines, Inc. or BAIPHIL, on Aug. 19 at the Dusit Thani Hotel, Makati City. The theme of the event was “Continuing Partnership to R.LS.E. in Banking — Resilience, Inclusivity. Sustainability, Engagement.” It has been edited for length and clarity.)

- By Romeo L. Bernardo

LET ME ASK: What does it mean to rise when the ground beneath us keeps shifting?

Let me highlight a few key developments that are shaping our path ahead.

+ First, inflation is easing. Over the past five months, inflation has come down to less than 2%, thanks to moderating rice and energy prices and actions by the Bangko Sentral ng Pilipinas (BSP). We expect the full-year average this year to settle near the lower end of our target range. But what matters even more is how people see inflation one year from now. Based on our surveys, expectations remain anchored — people believe inflation will stay low over the next year.

+ Second, our economy is growing steadily. GDP expanded by 5.5% in the second quarter, placing the Philippines as the second fastest-growing economy in the region. This momentum is supported by a healthy banking sector. Lending continues to grow, and digital financial channels are helping households and firms to continue to invest and spend.

+ Third, our banking system remains strong and resilient. We continue to exceed international standards in capital buffers, liquidity coverage, and asset quality. Our nonperforming loan ratio is steady at 3.4%, and capital adequacy stands at 16.5%. Key regulatory reforms — such as the new Capital Markets Efficiency Promotion Act — are expected to deepen our domestic financial markets, facilitating more efficient funding for infrastructure, innovation, and national priorities.