From AB Capital's The Opening Bell: Three Moves
Event
Bank lending has held up better than expected, prompting BMI to lift its 2026 growth forecast to 10% from 8.5%. Still, it expects growth to slow from 11% in August toward year-end and ease further to 9% by end-2027 as financial conditions tighten.
View
We think the key earnings issue is the mix between slower loan volumes and still-supportive asset yields. Another BSP hike could protect margins initially, but weaker demand and tighter underwriting should cap balance sheet growth. Based on our sensitivity analysis, a 1pp change in loan growth drives EPS forecasts higher by 1.0-1.6%, with greater sensitivity among lenders more reliant on balance sheet expansion.
Catalyst
Construction lending is the main offset if delayed public projects restart, which would favor banks with stronger corporate franchises. The larger risk is asset quality: as loan growth slows, denominator support fades, while high inflation, weak employment and rising rates could push consumer delinquencies and credit costs higher.
Action
In our view, this reinforces a preference for banks with diversified corporate books, stronger funding and higher reserve buffers. We would be more selective on consumer-heavy lenders, where moderating volume growth and rising provisioning could increasingly pressure earnings quality as the credit cycle slows into 2027.
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