Philippine banks may face weaker loan growth, higher credit costs and lower profitability this year as elevated inflation weighs on the country's consumption-led economy, according to Philstar Biz, citing Fitch Ratings.
The credit ratings agency's outlook reflects persistent price pressures that are expected to dampen consumer demand and economic activity, thereby reducing the demand for loans. Higher credit costs may also emerge as borrowers' repayment capacity weakens.
Fitch's assessment comes amid a challenging environment for Philippine lenders, which are already navigating margin pressures and regulatory changes. The forecast signals a potential slowdown in the banking sector's earnings growth, with implications for shareholder returns and capital positions.