Banks sustained their positive momentum in the first half going into the third quarter as loan growth and asset quality stayed resilient in the face of macroeconomic headwinds, CreditSights, a unit of Fitch Group, said in a report Monday.
It said net interest and fee incomes continued to provide a good cushion for poor trading income, which continued to be down across the board on rising rates, while sharply reduced credit costs kept profitability back at or near pre-pandemic levels.
“The BSP’s [Bangko Sentral ng Pilipinas] hikes [of 175 basis points during the third quarter) have started feeding through to NIMs [net interest margins] of the first-tier banks which supported net interest income,” CreditSights said, referring to BDO Unibank Inc., Bank of the Philippine Islands and Metropolitan Bank & Trust Co.
It said the second-tier banks had not had the same NIM uplift due to their weaker deposit franchises requiring them to pre-fund time deposits more aggressively amid CASA outflows as rates rise.