'Phl banks poised to anchor 2026 market recovery'

Philippine banks are expected to lead the stock market's rebound next year as lower policy rates, steady asset quality and attractive valuations position the sector for resilient earnings, according to J.P. Morgan.

- By KEISHA TA-ASAN

In its sector outlook, J.P. Morgan analysts Daniel Andrew Tan and Harsh Modi said the bottom-up view for banks remains steady, supported by a manageable credit environment and continued volume growth led by the country's largest lenders.

“The Bangko Sentral ng Pilipinas is on a rate cut cycle (175 basis points cuts from peak, with 75 basis points more expected), but transmission to net interest margin (NIM) is lower due to a combination of mix shift, reserve requirement cuts and competitive environment,” they said.

Loan growth may see “modest downside” because of weaker macro conditions, but large banks “should be able to maintain low double digit volume growth.”

Consumer and credit card nonperforming loans (NPLs) remain contained, while two of the country’s top banks, BDO Unibank Inc. and Metropolitan Bank Trust & Co. (Metrobank) “have excess coverage buffers.”

J.P. Morgan estimates return on equity at about 14 percent for both BDO and the Bank of the Philippine Islands (BPI).