For 2015 Bank profits down

MANILA, Philippines - Earnings of big banks slipped by more than one percent last year due to lower foreign exchange profits and higher expenses amid intense competition in the banking industry.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed profits of universal and commercial banks reached P120.27 billion last year or P1.39 billion lower compared to the P121.66 billion recorded in 2014.

The interest income of big banks booked a double-digit 10.3 percent growth to P367.28 billion last year from P332.93 billion in 2014 while interest expense increased 17.5 percent to P83.22 billion from P70.83 billion.

This translated to an 8.4 percent rise in net interest income to P283.88 billion last year from P261.75 billion in 2014.

Non-interest fell 11.8 percent to P112.4 billion from P127.49 billion due to lower other income.

Data showed non-interest expense of universal and commercial banks went up 5.7 percent to P252.58 billion last year from P238.99 billion in 2014.

The BSP reported a lower return on equity for big banks at 9.4 percent last year from 10.26 percent in 2014 while return on assets declined to 1.15 percent from 1.28 percent.

Assets of major banks went up by 8.1 percent to P10.89 trillion last year from P10.07 billion in 2014.

BSP Governor Amando Tetangco Jr. said in his speech during the Annual Reception for the Banking Community the Philippine banking sector was again a source of strength and stability for our economy in 2015.

Tetangco said the sound, stable and liquid Philippine banks continued to be a major source of funding for the productive sectors and helped generate jobs that support inclusive growth across the country.

He added the banking sector more than meets national and international standards as semestral stress tests conducted by the BSP confirmed further that bank capitalization stands resilient, even against extreme tail events.

“The sustained growth and stability of our banking sector in 2015 happened amid global financial turmoil,” Tetancgo said.

The BSP chief cited the decision of the US Federal Reserve to raise its near-zero interest rates by 25 basis points last Dec. 16 as well as the economic slowdown in China.

Tetangco said, the country should be able to manage external risks that may arise from continuing volatility and possible contagion and closer to home avoid excessive leverage and imprudent practices.

“In particular, we anticipate that 2016 will continue to test the resilience of our banking system, with market volatility that can heighten market liquidity and credit risks,” he added.