MANILA - Debt watcher S&P Global Ratings said Wednesday bank lending in the Philippines will grow 15 to 17 percent this year as the country's economy continues to expand.
S&P analyst Ivan Tan said loan growth is expected to remain robust amid the projected 6.4 percent GDP expansion this year.
"The conditions for sustained growth remain intact, in our view. Interest rates have stayed low by historical standards. Banks have abundant liquidity to lend," Tan said.
He added that banks are shifting their focus to lending after years of preferring to put their money in government bonds.
"We believe that the credit cycle in the Philippines has further to run. Most of the factors that drive credit cycles--corporate profits, low interest rates, and abundant liquidity--still look very much in place," Tan said.
However, S&P also said banks would continue to face headwinds in profitability.
"The rebalancing of the loan portfolio is likely to be protracted, and it will be some time before banks achieve a meaningful shift towards higher-yielding retail and consumer loans. Meanwhile, these banks' high costs remain a key hurdle in improving their profitability," he said.
Data from the central bank showed earnings of Philippine banks inched up 3.3 percent to P81.8 billion in the first half of the year from P79.19 billion in the same period last year.