Fitch Ratings revised its Philippine banking sector outlook from neutral to deteriorating.
First-quarter 2026 economic growth hit a five-year low. Persistent inflation further threatens the ability of borrowers to repay loans.
Rapid expansion into unsecured credit card receivables creates a significant vulnerability for lenders. Fitch expects higher credit costs to reduce bank profitability through the end of 2026.
Banks are increasing provisions to cover potential bad loans. The agency forecasts a gradual recovery for the sector in 2027.