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Thursday, May 23, 2024

Banks achieve record profits, loans, deposits

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The Philippine banking industry helped the economy recover from a 9.6-percent contraction in 2020, the country’s worst performance since the end of World War 2.

“As we all know, it was a surprisingly strong recovery. Coming out of a crisis, it was a recovery like no other,” Bangko Sentral ng Pilipinas Governor Eli Remolona said during the BSP’s 30th anniversary reception for the banking community in July.

He was referring to the 46-year high growth of 7.6 percent in 2022, just two years removed from the deep contraction.

“What was the difference this time? I’d say it was the banking system. Our banks maintained more than adequate levels of capital and remained flush with liquidity. This time, there was no need to repair balance sheets,” Remolona said.

“I have said this before, and I’ll say it again. Unlike in previous crises, this time our banks were part of the solution rather than part of the problem,” Remolona said.

BSP Gov. Eli Remolona

The banking system continued its strong performance as evidenced by sustained expansion in assets, deposits, and profit as well as stable capital and liquidity buffers and ample provision for credit losses.

Latest available data from the BSP showed that total assets of the banking system expanded by 11 percent year-on-year to P23.1 trillion as of end-March 2023 , surpassing the pre-pandemic average growth rate of 10.98 percent.

Credit activity improved as gross total loan portfolio increased 10.4 percent year-on year-to P12.5 trillion as of end-March 2023. This marked the 20th consecutive month of year-on-year growth rate in gross TLP.

Strong profits

Four banks recorded profits exceeding P20 billion in the first six months of 2023. BDO Unibank Inc., the largest lender with about P4.1 trillion in assets, posted earnings of P35.2 billion, driven by broad-based growth across core businesses. Metropolitan Bank & Trust Co. earned P20.9 billion, while Bank of the Philippine Islands booked P25.1 billion in profit.  State-run Land Bank of the Philippines also logged P20.9 billion in net income.

Non-performing loans coverage ratio across banking groups registered an increase this year. Universal and commercial banks posted an ample NPL coverage ratio of 111.5 percent as of end-March 2023. Meanwhile, thrift banks and rural and cooperative banks’ NPL coverage ratios stood at 65.9 percent as of end-March 2023 and 79.0 percent as of end-December 2022, respectively.

Total deposits

Total deposits of the banking system expanded 9.8 percent year-on-year to P17.7 trillion as of end-March 2023. This growth rate was higher than 7.2 percent in March 2022. These deposits were mostly peso-denominated and sourced from resident individuals and private corporations. By deposit type, savings deposits had the largest share of 46.2 percent (P8.2 trillion).

By banking group, universal and commercial banks had the largest share of deposits at 94.3 percent (P16.7 trillion) as of end-March 2023, followed by thrift banks at 4.2 percent (P735.2 billion) and rural and cooperative banks at 1.5 percent (P269.6 billion).

Latest rankings

As of March 2023, seven universal and commercial banks had trillions of pesos in terms of assets.

These included BDO Unibank Inc. of the SM Group, state-run Land Bank of the Philippines, Bank of the Philippine Islands, Metropolitan Bank & Trust Co. of GT Capital Holdings Inc., China Banking Corp. also of the SM Group, Rizal Commercial Banking Corp. of the Yuchengco Group and the Philippine National Bank of tycoon Lucio Tan.

They were followed by Development Bank of the Philippines, Union Bank of the Philippines and Security Bank Corp.

Meanwhile, Philippine Savings Bank, the thrift bank arm of the Metrobank Group became the biggest thrift bank, after BPI absorbed BPI Family Savings Bank.

The BSP said that as of July 2023, total banking offices reached 13,367 nationwide, including 12,878 branches and 489 head offices.

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