Moody's Investors Service has hiked its outlook for the Philippine banking system to positive from stable amid a buoyant economy seen to drive growth in the credit market, the debt watcher said in a statement.
"The robust and evolving state of the domestic economy will continue to offset any potential weakness in exports," analyst Simon Chen said in the statement.
"In particular, household consumption and steady government-led infrastructure spending will support a stable GDP growth rate of above 5%, which will in turn buttress the earnings growth of banks without raising concerns about overheating."
Moody's foresees annual credit growth to reach 11% to 13% in the next 12 to 18 months.
Moreover, the credit rater said banks are well-positioned to meet the new Basel III requirements by 2014.
"[E]ven if they maintain their current asset growth and profitability levels over the next 12 months, seven of the eight rated banks would still show Tier 1 capital ratios of 10% or more at end-2014," the statement read.
The banks are expected to maintain excess and stable liquidity in the next 12 to 18 months, as profitability is also seen to be maintained in the same period.