Philippines' leading banks: FY-2023 update

Summary

The Philippines' top banks are compounding growth in net revenues, net interest income, and profitability as the economy's post-pandemic credit cycle matures. BDO, BPI, Metrobank, and Union Bank of the Philippines are expanding lending, deposits, and fee-based income even as one institution absorbs the lingering costs of a major consumer banking acquisition, creating a divergent performance picture across the sector for fiscal year 2023.

Fee income growth reflects a market still heavily reliant on traditional revenue sources such as cross-border remittances, card fees, wealth management, and bancassurance, with rising credit card adoption supporting non-interest income even as one major lender saw its fee income slip. Net interest margins expanded across the group, aided by loan portfolios and deposit bases that both grew at a healthy clip, while asset quality and cost efficiency showed only marginal shifts overall, masking sharper moves at individual banks tied to integration costs and portfolio mix.

Looking into 2024, moderating inflation and anticipated rate cuts are expected to support credit demand, particularly in the corporate segment, while loan repayment conditions and provisioning coverage suggest the sector enters the year from a position of relative strength. The outlook raises questions about how quickly credit growth can accelerate and which banks are best positioned to capture the next leg of Philippine banking sector expansion.

• Union Bank of the Philippines' Citibank consumer portfolio integration
• Card fees, wealth management, and bancassurance income streams
• Loan-to-deposit dynamics across the top four banks

Which of the Philippines' leading banks is best placed to sustain double-digit revenue growth as the credit cycle turns?