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July 21, 2024

Top PH banks expected to outperform amid uncertain environment, says CreditSights

Amidst an uncertain business landscape marked by heightened inflation and increased interest rates, larger banks in the Philippines are predicted to fare better compared to their smaller counterparts, as outlined by a report from CreditSights, a unit of the Fitch Group.

The report emphasized the resilience of top-tier banks, their ability to protect net interest margins, and their established competitive positions, indicating these factors as crucial in maintaining their performance.

CreditSights specifically moved BDO Unibank Inc. (BDO) from “market perform” to “underperform” while affirming Bank of the Philippine Islands (BPI) at “market perform.” Meanwhile, it affirmed Philippine National Bank, Rizal Commercial Banking Corp., and Union Bank of the Philippines at “underperform” status.

Despite challenges, the easing of inflation and the potential conclusion of US interest rate hikes could offer support for growth.

The analysis also highlighted the divergent asset quality between larger first-tier banks and smaller second-tier ones, indicating the former’s superior fundamentals.