Philippine banks' core lending business to drive profits in 2014

Earnings will be less reliant on volatile trading gains.

Maybank Kim Eng expects the core lending business to take center stage in driving banks’ earnings next year. This should bode well for the sector as earnings become more stable and less reliant on volatile trading gains.

Here's more from Maybank Kim Eng:

Last week, Moody’s Investor Service raised the Philippines’s sovereign rating to investment grade and noted the ample liquidity in the banking system – the only system worldwide deemed by Moody''s to have a positive outlook.

Ample liquidity and an investment-grade rating are likely to maintain the current low-interest rate environment and help stimulate loan demand.

Additionally, prospects of sustained fast growth were confirmed by the World Bank and Asian Development Bank as both raised 2013-2014 growth forecasts for the Philippines.