Fitch: Philippine banks may weaken

Fitch Ratings said that Philippine banks have improved their financial profile over the past two to three years thanks to better asset quality and enhanced capitalization.

But, the less benign economic environment is expected to result in weaker performance with slower growth in lending and underlying profits, Fitch said, as well as a modest deterioration in asset quality.

These risks are largely reflected in the banks' moderate-to-weak individual ratings and the banking systemic risk indicator of D.

After a long period of weak credit demand, loan activity in the Philippines picked up amid the improved economic conditions of 2006-2007, spurred mainly by consumer financing, followed by corporate loans, the agency said.

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