According to Fitch Ratings, a well-known financial analysis company, the outlook for banks in the Philippines is improving in 2024. Here are some of the areas to watch out:
Higher Profits
Because interest rates are not expected to decrease as quickly as previously thought, banks will be able to maintain their high profits from interest for longer. If you have a savings account, you might notice that the interest you earn remains higher for a longer period. This is good for you as a saver, but it also means banks are earning more from the loans they give out.
More Loans
Consumer loans continue to increase, especially credit card and personal loans. Additionally, many infrastructure projects are expected to start, which will lead to more lending. You might see more of your friends and family members using credit cards for big purchases or taking out personal loans for home improvements. At the same time, you might notice more construction projects in your city, which are often funded by bank loans.
Strong Economy
Fitch expects the Philippine economy to grow by 5.8% in 2024. This growth will help prevent a significant increase in unpaid loans. This translates to more job opportunities, new businesses opening, or your company expanding. This economic growth means more people can pay back their loans on time. To see the latest posting in the job market, head over to atinatin.com.
Higher Interest Rates
The Bangko Sentral ng Pilipinas (BSP) decided to keep the interest rate at 6.5% in May 2024. Although this rate is still expected to decrease in the future, it won’t happen as quickly as previously predicted. If you’re planning to take out a loan for a new car or house, you might find that interest rates remain higher for longer than expected. This means your monthly payments might be a bit higher, but it also means your savings account will continue to earn more interest.
More Loans for Construction and Transportation
There has been an increase in loans for construction and transportation projects, which shows growth in the economy. You might see new roads being built, improvements to public transportation, or new buildings going up in your area. These projects are often funded by bank loans and indicate a growing economy.
Sufficient Capital
Due to continued profit growth, banks are expected to maintain enough capital for their operations. Example: This means banks are financially healthy and can withstand unexpected economic shocks. For you as a customer, this translates to more security for your deposits and potentially more services or better rates offered by banks.
While there are still some risks, such as the possibility of more unpaid loans due to higher interest rates, Fitch expects that banks will be able to manage these risks because of the strong economy and good job market in the country.
Overall, the outlook for banks in the Philippines in 2024 is more positive compared to the previous year. For the average Filipino, this could mean more accessible loans, better interest rates on savings, and a generally more stable banking environment. However, it’s always important to manage your personal finances wisely, regardless of the overall economic outlook.
