Global debt watcher Fitch Ratings on Wednesday retained the stable outlook for the Philippine banking system, saying the pick-up in government infrastructure spending will spur broader investment activity which is good banks.
“Fitch expects operating conditions to be generally supportive of loan growth and credit quality. A recovery in government infrastructure spending should lift GDP growth in the coming year,” Fitch said in its report titled “Fitch Ratings 2020 Outlook: Asia-Pacific Emerging Market Banks.”
It said the domestic banking sector’s profitability was likely to moderate after a stronger 2019.
“We believe NIMs [net interest margins] have peaked in line with market interest rates, while credit costs are likely to continue to normalize as loan books season. Nevertheless, sustained economic growth should help cushion against major downside risks,” Fitch said.
Fitch said the banks’ stable rating outlook also reflected the benign environment and supported by the banks’ adequate loss-absorption buffers, satisfactory profitability and broadly steady funding and liquidity profiles.
