THE Cebu Bankers Club (CBC) foresees a relatively stable period for the industry for the next two years as it has put measures in place in anticipation of the effects of the Covid-19 pandemic.
Romeo Comabig, CBC president, told SunStar Cebu that the industry’s outlook remains relatively stable because banks have anticipated the movements in the money and capital markets in the next two years.
“With the coronavirus pandemic, banks are now calibrating their strategies to absorb loss from non-performing assets while at the same time maintaining public confidence by providing enough liquidity and funding for the next two years,” he said.
Comabig said that in a nutshell, banks are stable even with the disruptions of external factors brought about by the pandemic.
Meanwhile, the banking industry leaders’ bullish expectations on banking system prospects have eased based on the results of the Banking Sector Outlook Survey for the second semester of 2020.
The subdued optimism is in view of the disruptions in activities of the domestic economy due to lockdowns along with the global spillovers from soft demand, weaker tourism and lower remittances.
Most respondents projected that real gross domestic product growth will return to a range of less than six percent to 6.3 percent within the next two years.
Respondents identified that economic sectors such as the accommodation (hospitality/tourism), transportation and wholesale and retail trade are the hardest hit sectors but believed that these sectors are poised to recover in the next six months to two years.
Bangko Sentral ng Pilipinas Gov. Benjamin Diokno noted that the outlook on the Philippine banking system remains relatively stable.
“Majority of the respondent banks projected growth in their loan portfolio over the next two years between 10 percent and 15 percent,” Diokno said.
Banks also anticipate a more active participation in the money and capital markets in the next two years as growth in financial assets (excluding loans) is projected to not exceed 10 percent by more than half of respondents, while the remaining banks estimated a double-digit growth.
A double-digit deposit growth is also expected by most of the banks to fund financial asset and loan expansion.
Meanwhile, majority of respondents expect the non-performing loan ratio to exceed three percent in 2021 to 2022, while the ratio of restructured loans to total loans is estimated at a range of more than three percent to more than five percent by almost half of banks.
The banks also intend to maintain their capital and liquidity ratios at levels higher than domestic and global standards to promote institutional stability.
In the survey, banks disclosed that they would leverage on financial technology for strategic efficiency in the next two years to meet business objectives.
Mindful of cyberthreats following the lockdowns and remote working arrangements, more than half of the banks said they are “prepared”to handle and manage cyberthreats. (JOB with PR)