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April 19, 2024

Second Tier’ PH Banks expected to underperform – Fitch unit

Three Philippine banks are expected to underperform as competition and an economic slowdown could put pressure on their “riskier” loan portfolios, according to CreditSights, a unit of the Fitch Group.

Security Bank Corp., Union Bank of the Philippines, and Philippine National Bank are classified as “second tier” banks and have weaker franchises, thinner capital, and underwhelming loan growth, making them vulnerable to riskier lending practices.

Meanwhile, BDO Unibank Inc., Bank of the Philippine Islands, and Metropolitan Bank and Trust Co., grouped into “first tier” banks, are expected to perform well due to their bigger size, larger corporate books, good capital and loan loss buffers, and relative stability in operating performance.

Experts warned that 2023 could be a challenging year due to expensive borrowing costs and persisting economic headwinds.

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