ANALYSTS expect the country’s financial markets to recover along with the economy next year, but cautioned risks remain with the threat of the coronavirus disease 2019 (COVID-19), as shown by the mixed performance in the third quarter.

WITH THE ECONOMY showing signs of recovery, investors may consider bank stocks for next year as lenders are seen to be in a better position to bounce back compared with the previous quarters.

It is often said that past performance is not a guarantee of future results. Nevertheless, the credit information that displays payment histories is considered a key ingredient in the financial sector as it helps address the problem of asymmetric information by helping lenders screen borrowers and providing an incentive for borrowers to repay their loans.

Unobank secured a digital banking license from the Bangko Sentral ng Pilipinas (BSP) in June, adding to the roster of lenders offering all-online services.

It was in 2011 when the country’s five large domestic and foreign banks — BDO Unibank, Inc., Bank of the Philippine Islands, Citibank Philippines, Metropolitan Bank & Trust Co. (via its then-credit card subsidiary Metrobank Card Corp.), and Hongkong and Shanghai Banking Corp. (HSBC) — teamed up with Chicago-based credit information management firm TransUnion to set up the country’s first international private credit bureau TransUnion Philippines.

While online banking is not new in the Philippines, banks without physical branches could sooner or later become the norm in the country as the central bank distinguishes digital-only banks from those with brick-and-mortar presence.

THE reimposition of lockdowns amid renewed coronavirus disease 2019 (COVID-19) concerns, coupled with weaker economic recovery prospects drove sentiment in the country’s financial markets for much of the second quarter.

ANALYSTS noted the relatively better performance of banks in the second quarter due to higher earnings but said the attractiveness of bank stocks remain tied to prospects of economic recovery.

FITCH RATINGS on Monday cut its outlook on rated local lenders to reflect the revision done for the Philippines, which could mean a rating...

MONETARY AUTHORITIES have repeatedly said the banking industry still has sufficient resources and buffers, but amid the rising soured loans, it still pays to have a safety net for banks should they be overburdened with these nonperforming assets (NPAs).

FINANCIAL MARKETS in the first quarter of 2021 continued to be driven by developments surrounding the coronavirus disease 2019 (COVID-19) pandemic with the arrival of vaccines lifting investor sentiment in the early part of the quarter before being offset by the renewed strict lockdowns due to a fresh surge in coronavirus cases.

ANALYSTS remain cautiously optimistic on bank stocks amid uncertainties surrounding the prospects of easing lockdown restrictions and the pace of vaccinations, which would influence demand for loans as well as the willingness of banks to lend.