Philippine banks to lead profit growth among regional peers
Singapore and Thailand are forecast to report a contraction this year
[LONDON] Philippine banks, helped by robust loans, are poised to deliver the highest net interest income growth among South-east Asian lenders this year.
Banks in the Philippines are expected to post an average 11 per cent growth in net interest income in 2025, followed by Indonesian banks at 4.3 per cent and Malaysia lenders at 3 per cent growth, respectively, according to data compiled by Bloomberg Intelligence (BI). Singapore and Thailand are forecast to report a contraction this year.
BI data includes analysts’ forecasts. Not enough data was available to assess Vietnam banks.
Concerns over falling net-interest income gains and new tax rules have lowered earnings expectations for Singaporean banks, according to BI.
In Thailand, persistently high household debt and a weakening economy are weighing on the outlook for Thai lenders. Indonesian peers are experiencing little appetite for consumer loans because of pessimism over job security.
Vietnamese banks may face challenges in maintaining sustainable growth due to “pressure from unresolved non-performing loans [that] could affect the short-term business results of banks,” according to KPMG.
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Meanwhile, low inflation, a strong labour market, and steady remittance inflows have buoyed private consumption in the Philippines, with the economy expanding 5.4 per cent on-year in the first half, according to a recent World Bank report.
The Philippines’ economy, while experiencing slower factory activity because of US tariffs, is less vulnerable to export slowdowns than other regional countries, according to BI.
The 2025 earnings outlook of Philippine lenders may also be supported by the central bank’s surprise rate cut earlier this month, which is part of a series of rate cuts since last year. The regulator signalled it may ease further, with lower interest rates expected to drive higher loan demand.
Philippine banks, though, may face headwinds next year. A corruption scandal tied to flood-control projects could curtail growth in 2026 as infrastructure projects draw government scrutiny.
“Should the ongoing probe uncover corruption across other infrastructure projects beyond flood control, it could lead to even tighter scrutiny on government spending and reduce spending substantially below fiscally programmed levels,” BMI Research said in a report this month.
That could ripple through the economy and undercut company and consumer confidence, according to a DBS Group Holdings research note.
State-owned banks such as Land Bank of the Philippines would be more exposed to a slowdown in infrastructure construction than private institutions because they provide the lions’ share of loans for the projects, according to BI senior analyst Sarah Jane Mahmud.
Private banks BDO Unibank, Bank of the Philippine Islands and Metropolitan Bank & Trust focus more on sectors such as real estate and telecommunications, she said. BLOOMBERG
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