Fitch Ratings has forecast continued strong profitability for the country’s major banks in 2025, building on last year’s solid performance. The credit agency projects a revenue and net income growth of 8 percent to 11 percent for the country’s three largest banks—BDO Unibank, Bank of the Philippine Islands, and Metropolitan Bank & Trust Company—driven by robust domestic economic conditions, higher interest rates, and steady loan demand.
Despite a reduction in local policy rates since August 2024, the banks have benefited from increased retail loan activity, improved corporate loan demand, and significant trading gains. Fitch expects these factors, along with a favorable GDP growth forecast of around 6 percent, to sustain strong margins and profitability over the next 12-18 months.
The central bank’s decision to pause its interest rate cuts in February 2025 adds uncertainty, but Fitch still anticipates a gradual reduction in rates, maintaining supportive conditions for the banks. Furthermore, although rising retail loan volumes may increase credit risk, Fitch expects manageable impairment levels due to the country’s healthy labor market and economic resilience.
In the broader macroeconomic landscape, Fitch anticipates that the Philippines will continue to grow at a pace above the median for ‘BBB’-rated countries, driven by infrastructure spending and a robust consumption-driven economy. With manageable household and corporate leverage, the banking sector’s prospects remain favorable, though the outlook for the banks’ Viability Ratings (VR) is constrained by the overall operating environment.
Economists outside of Fitch have noted the economy grew by 1.8 percent in the fourth quarter of 2024, higher than the revised 1.5 percent expansion in the third quarter but lower than the consensus forecast of 1.9 percent. This was driven by strong net trade as exports grew 3.6 percent from only 1.4 percent a quarter earlier. Imports also slowed by 4.8 percent after expanding 2.9 percent.
As a result, while the three major banks’ ratings are unlikely to see a significant upgrade, their strong performance could lead to improved standalone Viability Ratings if they maintain current financial metrics without overexposing themselves to risk.
BDO earlier reported 12 percent more net income of P82 billion in 2024 on the basis of a 23 percent rise in customer loans to P3.2 trillion and an 8 percent rise in net interest and non-interest income streams.
The Bank of the Philippine Islands posted net income of P62 billion or 20 percent more than in 2023 as revenue rose 23 percent, its net interest income increasing 22.3 percent to P127.6 billion and non-interest income rising 25.3 percent to P42.6 billion.
Metrobank net income rose 14 percent to P48.1 billion on the back of net interest income rising 8.7 percent to P114.1 billion.
