Phl banking sector ‘improving' – Fitch

Global credit watchdog Fitch Ratings has revised its outlook for the Philippine banking sector to ‘improving’ from ‘neutral’ as higher for longer interest rates could further boost banks’ rising net interest margins.

- KEISHA TA-ASAN

“Fitch Ratings has revised the Philippine banking sector outlook to improving from neutral as we expect banks to be able to preserve their record-high net interest margins (NIM) for longer due to a delay in policy rate cuts,” the debt watcher said in a report.

The credit rating agency said the Bangko Sentral ng Pilipinas (BSP) is still expected to start its monetary policy easing this year, but the pace would be “gentler” than what Fitch had previously anticipated.

Higher interest rates should also help Philippine banks maintain assets yields for the second half of the year.

“Meanwhile, the sustained expansion in higher-yielding unsecured lending should result in incrementally better NIM, which we now project to expand by about seven basis points for the year, reversing from a seven-basis-point contraction previously,” Fitch said.