BSP, Phl banks prepare for 2025

As 2024 ends, the Bangko Sentral ng Pilipinas (BSP) and the Philippine banking sector are poised to tackle a pivotal year ahead.

- By KEISHA TA-ASAN

With economic challenges and geopolitical uncertainties looming, optimism about the sector's resilience is tempered by cautious preparation.

In an interview with The STAR, BSP Deputy Governor Chuchi Fonacier said the central bank remains confident in the banking system's capacity to thrive this year.

"The outlook for the Philippine banking system remains optimistic. Based on a two-year horizon, banks project double-digit growth in assets, loans, deposits and net income," Fonacier said.

She said the two-year forecast is supported by expectations of improved loan quality and continuous strengthening of loan loss reserves.

She said Philippine banks are also committed to maintaining robust capital and liquidity buffers that are above regulatory standards, with strategic priorities focused on credit expansion, operational efficiency and digitalization.

Based on the latest BSP data, profit of banks operating in the Philippines rose by 6.4 percent to P290.1 billion from January to September 2024 compared to the previous year's P272.6 billion.

This was supported by robust loan growth, as loans disbursed by universal and commercial banks amounted to P12.5 trillion in end-October last year, up by 10.6 percent from the P11.31 trillion recorded in the same period in 2023.

"Overall, the Philippine banking system is well-positioned to navigate the evolving economic and financial landscape," Fonacier said.

However, while the sector is brimming with potential, analysts caution that 2025 will require deft navigation of local and global challenges.

Miguel Chanco, chief emerging Asia economist for Pantheon Macroeconomics, warned that real monetary policy would remain tight this year due to the aggressive tightening cycle from 2022 to 2023.