Banks book robust growth in resources

MANILA, Philippines – Philippine banks booked a double-digit growth in total resources in the first quarter amid external challenges arising from the impending further rate hike in the US, the negative rates in Japan as well as the slowdown in China.

Data released by the Bangko Sentral ng Pilipinas showed total resources of Philippine banks went up 10.1 percent to P12.52 trillion from January to March compared with P11.37 trillion in the same period last year.

The total resources of big banks or universal and commercial banks increased 9.8 percent to P11.25 trillion from P10.24 billion, while that of mid-sized banks or thrift banks surged 16.7 percent to P1.05 trillion from P899.3 billion.

On the other hand, total assets of small banks or rural banks fell 9.7 percent to P213 billion in the first quarter from P236 billion in the same quarter of last year due to the exit of more weak players in the industry.

Last year, total resources of the Philippine financial system increased 7.4 percent to P12.4 trillion from P11.5 trillion in 2014. As a percent of gross domestic product (GDP), the country’s banking resources stood at 93.4 percent.

The BSP said the Philippine banking system remains resilient as it continued to support long-term economic growth.

The continued rise in resources including deposits, profits, and retained earnings indicate that banks have the ability to service funding needs of corporate and household clients.

At the same time, this shows banks have enough to act as a buffer against any external shocks.

BSP Governor Amando Tetangco Jr. earlier said the Philippine banking system continued to expand with total assets roughly doubling over the past six years due to the steady growth of deposit liabilities.

“In 2016, there are still challenges to our positive position. These will come mostly from the external side. There is divergence in the monetary policies in the advanced economies. The US Fed is poised to raise rates (albeit now at a slower pace in 2016 than the Fed first indicated in December 2015), while European Central Bank and Bank of Japan are in negative interest rate territory,” he said.

The country’s GDP growth accelerated to 6.3 percent in the fourth quarter of last year from the revised 6.1 percent in the third quarter amid the improving government spending and robust domestic demand.