BANKING INDUSTRY

PROSPECTS AND OUTLOOK

Mark Genuel S. Paradero
Background of the Banking Industry
in the Philippines
Key Players of the Banking Industry
in the Philippines
Performance of the Banking Industry
for the Last 5 Years (2016-2021)
Characteristics of Investors and their
Investing Behavior
 Investors’ Profile and Behavior
- Most of the stockholders are related to each other.
- Banking institutions are closely related to companies
belonging to largest conglomerates in the Philippines.
- They expect that the stocks of the banking institution will
increase in the future once the country will reach herd
immunity.
 Investors’ Profile and Behavior
- However, uncertainties because of Delta variant still pose a
bearish expectation that the quality of their credit portfolio
especially the loans for real estate investments will further
deteriorate.
- Additional lockdowns are perceived as additional strain to
the value of the banking entities.
 Investors’ Profile and Behavior
- Most investors prefer sustainable initiatives of banks
because as the investors become more active and
sophisticated, so with their awareness that climate change
poses physical risks and financial risks to the operations of
the firm.
- The ECQ on August 6-20 causes panic selling in the market.
To Invest or To Not Invest? Why?
 DECISION: SELL NOW!
- The market seems to be bearish.
- With the uncertainties caused by the additional
lockdown and other quarantine restrictions, banks are
exposed to some risks especially credit risks from the
non-performing loans of small corporate entities and
individual investors.
 DECISION: SELL NOW!
- Non-performing loans are expected to increase to 6%
this year.
- Lockdowns will continue to strain the debt repayment
capacity of the borrowers.
- Lending will remain flat. It will not grow.
 DECISION: SELL NOW!
- Asset quality will continue to weaken this year.
- No or little credit growth because expansion plans are
halted.
- Bank lending shrank for the seventh straight month.
- Profitability will remain at lower levels than the pre-
pandemic level.
 DECISION: SELL NOW!
- Non-performing loans increased by 83%.
- Allowance for credit losses jumped by 50.4%.
- Gross non-performing loans ratio accelerated for the
fifth straight month at 4.49%.