Strong growth to support Philippine banking sector

THE PHILIPPINE banking system's credit profile will likely remain stable on the back of the country's strong macroeconomic fundamentals, Fitch Ratings said.

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"Fitch Ratings believes the Philippines' resilient medium-term economic potential and favorable banking business prospects reinforce banks' standalone credit profiles," it said in a peer credit analysis on Wednesday.

Earlier this month, the credit rater hiked the country's banking sector operating environment score to "bbb-" from "bb+."

All rated Philippine banks' viability ratings (VR) were also revised one notch higher this month.

"This considers the country's strong growth prospects, with Fitch forecasting GDP (gross domestic product) growth of 6% over the next two years, which should underpin banking business volume and keep impairment risks at bay," it said.

The government is targeting GDP to grow by 6-8% this year until 2028.

"Rising geopolitical tensions and greater trade protectionism pose downside risk to the Philippines' growth momentum, but we believe it is relatively insulated and more resilient than many of its export-oriented regional peers, given its lower reliance on merchandise exports."