Fitch: Phl banks to benefit from shallower rate cuts

Philippine banks are expected to emerge as key beneficiaries across Southeast Asia economies if policy rate cuts remain shallower than anticipated in 2025, Fitch Ratings said.

- By KEISHA TA-ASAN

In its latest commentary, the debt watcher said robust funding profiles and liquidity in the banking system could enable larger Philippine banks to maintain net interest margins (NIM).

"We believe Philippine and Singapore banks will be key beneficiaries if rates are higher than we expected. Our rated banks in these markets have good funding profiles and are in liquid banking systems that can capitalize on yields staying buoyant while keeping deposit rates lean," Fitch said.

Smaller Philippine banks, however, face more challenges, as their weaker deposit bases and limited competitive edge in lending constrain their ability to leverage the same benefits.

Fitch's outlook suggests that central banks across Southeast Asia, including the Philippines, will likely lower policy rates this year.