Bank assets hit record P10.3 T as of June

MANILA, Philippines - The local banking system has grown its asset base and other key accounts to record-high levels, reflecting a strong and sound financial system, the Bangko Sentral ng Pilipinas said.

“The Philippine banking sector today stands on solid ground and can rightfully claim credit for helping keep our economy on the growing path,” BSP Governor Amando M. Tetangco Jr. said.

Tetangco said that as of June 2014, figures for the banks’ consolidated assets, loans, deposits, and capital have all reached “record-high levels.”

Central bank data showed that asset accounts of the Philippine banking system amounted to P10.28 trillion as of June, while the industry’s total loan portfolio amounted to P5.21 trillion. At the same time, deposit liabilities totaled P7.9 trillion, while capital accounts of banks reached P1.2 trillion.

The strong and sound banking system that the country enjoys today is a product of the BSP’s policy initiatives and the banks’ collaborative efforts in implementing them, Tetangco said.

“In the aftermath of the recent global financial crisis, the Philippine banking system was seen as a key element of financial stability and reform success,” Tetangco said, noting how the industry and regulator should continue building on that moving forward.

However, he cautioned that there are four major issues that the banking system should face head on if it wants to sustain its robust state today.

The first issue, Tetangco said, is upholding the “integrity” of the system’s pricing framework, followed by the banks’ approach to implementing Basel 3.

Basel 3 is an updated set of reform measures meant to strengthen the regulation, supervision and risk management of banks. Local banks were required to comply with a new set of capital rules under the Basel 3 reforms since the start of the year. The central bank, however, has yet to roll out other reforms under the new standards.

Tetangco said the third issue banks will need to take into account is the development of new financial market infrastructure such as the country’s retail payment system and making it less reliant on cash and cheques.

The last issue is developing the consumer protection framework and empowering customers through financial literacy efforts, Tetangco said.

“We have accomplished much but much more needs to be done… while we can say that we’ve been there and done that, we also know that what the future holds may not be something we have done before,” Tetangco said.

“We must remain vigilant in our quest for financial stability. Such stability will be vital and sustainable as long as it rests on strong financial institutions, grow on financial market infrastructures, and empower financial consumers,” he added.