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Home News Macro

Philippines’ Top Bank CEO Warns of Tariff Fallout, Urges Lenders to ‘Expect the Worst’

by Team Lumida
April 25, 2025
in Macro
Reading Time: 5 mins read
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Key Takeaways:

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  • BDO Unibank Inc., the Philippines’ largest bank by assets, has increased provisions for bad loans, anticipating potential fallout from U.S. tariffs and global economic uncertainty.
  • CEO Nestor Tan cited past Black Swan events, such as the Asian financial crisis, the 2008 global financial crisis, and the 2020 pandemic, as reasons for caution.
  • BDO’s first-quarter net income rose 7% to 19.7 billion pesos ($350 million), but profit growth for 2025 is expected to be slightly below last year’s 12%.
  • The bank is concerned about currency and interest rate volatility stemming from U.S. trade policies, as well as the Philippines’ fiscal and current account deficits.
  • BDO has set aside general provisions equivalent to 2% of its loan book, higher than competitors, to prepare for potential unexpected losses.

What Happened?

BDO Unibank Inc., the Philippines’ largest lender, is bracing for economic turbulence as U.S. tariffs and global trade uncertainties create volatility in currencies and interest rates. CEO Nestor Tan warned that banks should “expect the worst,” citing the increasing frequency of Black Swan events, such as the Asian financial crisis, the 2008 global financial crisis, and the pandemic.

To prepare for potential risks, BDO has increased its provisions for bad loans, setting aside an amount equivalent to 2% of its loan book—higher than its competitors. The bank’s first-quarter net income rose 7% to 19.7 billion pesos, but this fell short of analysts’ expectations due to peso depreciation and margin pressures from lower interest rates.

Tan also expressed concerns about the Philippine government’s ability to respond to economic challenges, given its fiscal and current account deficits.


Why It Matters?

BDO’s cautious stance reflects the broader challenges facing financial institutions in emerging markets as they navigate the ripple effects of U.S. trade policies and global economic uncertainty. The bank’s proactive approach to increasing provisions highlights the importance of risk management in an unpredictable environment.

The warning from the Philippines’ top bank underscores the potential for U.S. tariffs to create widespread economic disruptions, particularly in regions heavily reliant on trade and foreign investment. Currency and interest rate volatility, combined with fiscal constraints, could further strain the ability of governments and businesses to weather economic shocks.

BDO’s performance also serves as a barometer for the Philippine banking sector, with its profit growth and provisioning decisions likely to influence industry trends.


What’s Next?

BDO will continue to monitor global economic developments, particularly U.S. trade policies and their impact on currency and interest rate volatility. The bank’s ability to manage risks and maintain profitability will depend on its proactive measures and adaptability to changing market conditions.

Other banks in the region may follow BDO’s lead in increasing provisions and preparing for potential economic shocks. Meanwhile, the Philippine government’s fiscal and monetary policies will play a critical role in stabilizing the economy and supporting financial institutions.

For now, BDO’s warning serves as a reminder of the importance of vigilance and preparedness in an increasingly uncertain global economic landscape.

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Disclaimer Important Information This site is for informational purposes only. Information presented on this site does not constitute as investment advice.

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Lumida's website (referred to herein as the "Website") is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of the Website on the Internet should not be construed by any client and/or prospective client Lumida’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.

Any subsequent, direct communication by Lumida with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

‍Lead Capture Forms: By submitting your contact information in the forms on this site, you are not obligated to invest in Lumida's product or services.
‍Address: Lumida Wealth Management, 25 W 39th Street Suite 700, New York, NY 10018