PHILIPPINE banks’ loan growth is going to be moderately faster given the recent monetary policy easing by the Bangko Sentral ng Pilipinas (BSP), Fitch Solutions Macro Research said Monday.
Fitch Solutions said it revised higher its loan growth outlook for 2019 to 13 percent from a previous outlook of 11 percent.
It also revised its 2020 outlook to 15 percent from the previous forecast of 12 percent.
“With monetary easing underway and a rebound in domestic confidence, we expect loan growth to improve over the coming quarters,” it said.
It brought the overnight borrowing rate to four percent, the overnight lending to 4.5 percent, and the overnight deposit rate to 3.5 percent.
The policy-setting Monetary Board is meeting two more times- Nov. 14 and Dec. 12-but Fitch Solutions said no further rate cuts are expected this year.
“We forecast the BSP to maintain a dovish stance over the coming quarters,” said Fitch Solutions, but noted that another rate cut could come in the first quarter of 2020.
“This informs our view for modest rebound in loan growth peaking at around 15 percent in 2020,” it said.
Fitch Solutions noted, however, that loan growth may be dampened by ongoing trade tensions between the world’s biggest economies.
“Unresolved tensions between the United States and China and a general softening of growth amongst the major global economies in 2020 could see softer demand for Philippine exports which would eventually filter through to weaker domestic confidence,” it said.
“More importantly, the key risks to our forecast is for a more pronounced downturn in the global economy to temper the impact of monetary and fiscal stimulus in the Philippines and for a significant risk-off event forcing banks to tighten credit supply to protect capital buffers,” Fitch Solutions added. (GMA News)
