The banking system is another strength of the Philippine economy as it remains sound and stable despite the risks coming from domestic and external fronts.
The banking industry maintained its resilience and robust footing as shown by continued growth in assets, deposits, and profit, as well as stable capital and liquidity buffers and ample provision for credit losses.
Total assets of the industry expanded 6.7 percent year on year to P20.7 trillion as of end-April 2022. The growth rate was higher than the 3.9 percent in April 2021 but slightly lower than the 6.9 percent a month ago.
Deposit generation mainly funded the year-on-year asset growth. By banking group, the share of universal and commercial banks was maintained at 94 percent (P19.4 trillion) of total assets of the banking system, followed by thrift banks at 4.4 percent (P917.8 billion), and rural and cooperative banks at 1.6 percent (P329 billion).
Total loan portfolio further grew 7 percent year on year to P11.4 trillion as of end-April 2022. This growth rate was a turnaround from the 2.5-percent contraction in April 2021 and relatively better than the 5.8-percent growth a month ago.
It also marked the ninth consecutive month of positive year-on-year growth rate in the total loan portfolio of the banking industry. The loan expansion largely came from the real estate, manufacturing, information and communication, wholesale and retail trade, and financial and insurance sectors.
Collectively, these sectors accounted for around 53 percent of the total loans of the domestic banking system. Bangko Sentral ng Pilipinas has generally kept policy rates low and maintained an accommodative policy stance, which enabled banks to pass on lower interest rates to their clients during the pandemic.
However, with the reopening of the economy amid favorable market conditions, the BSP has started to gradually raise the policy rate after a series of policy rate cuts in 2020.
The BSP has already raised the policy rates this year four times to 3.75 percent.
Overall, a declining trend has been observed in both mean and median weighted average interest rates (WAIR) since the start of the pandemic.
But lending rates have started to inch up in 2022. For the period ending March 2022, the overall mean WAIR on loans of big banks stood at 6.4 percent, lower than the 8.2 percent in March 2020 (the start of quarantine period) but higher than the 5.5 percent in March 2021.
The total amount of new loans granted by big banks for the month of March 2022 stood at P827.8 billion. Loans to private corporations had the largest share of new loans granted at 69.2 percent (P572.6 billion), followed by loans to individuals at 15.6 percent (P129.1 billion).
Meanwhile, agri-agra loans and micro, small and medium enterprises loans had 8.9 percent share (P73.3 billion) and 4.6 percent share (P38.2 billion), respectively, of new loans granted for the same period.
Banks likewise continued to provide credit and relief to their borrowers. As of end-April2022, the level of restructured loans expanded by 40.7 percent year on year to P340.5 billion, equivalent to 3 percent of the total loan portfolio of the banking system.
Amid the pandemic, the sustained confidence of depositors was evident in the continued deposit growth. Total deposit liabilities of the banking system grew by 7.2 percent year on year to P16.1 trillion as of end-April 2022, higher than the 6-percent growth rate in April 2021.
The banking system sustained its profitability as combined net profits climbed 26.3 percent year on year to P66.3 billion for the period ending March 2022.