Bank deposits breach P11 T in H1

MANILA, Philippines -  Bank deposits continued to register a double-digit growth in the first half, rising more than 14 percent to a record P11.01 trillion from P9.56 trillion in the same period last year, the Bangko Sentral ng Pilipinas (BSP) reported.

Peso deposits rose 14 percent to P9.12 trillion in end-June from P8 trillion a year ago, while foreign currency deposits owned by residents rose 14.5 percent to P1.89 trillion from P1.64 trillion.

The steady growth in deposits resulted in a 13.2 percent increase in the total resources of Philippine banks to P14.56 trillion in the first semester from a year-ago level of P12.86 trillion.

BSP Governor Nestor Espenilla Jr. said the Philippine banking system remains sound and stable, supported by the central bank’s implementation of deep and meaningful financial reforms over the past decade.

“Bank assets have more than tripled which was funded by sustained mobilization of customer deposits. These are retail deposits,” Espenilla said.

The banking industry’s loan book continued to expand and remained diversified across various economic sectors.

“The expansion of the loan portfolio is supported by bank’s improved credit risk management systems which is part of the continuing reforms of the BSP,” Espenilla said.

Furthermore, Espenilla said the loan quality of the banking system remained satisfactory with the non-performing loan (NPL) ratio recording a declining trend at 1.94 percent as of end-June.

“Banks today are very prudently maintaining adequate allowances for expected credit losses. So if you crank in the loan loss provisions of our banks today into the gross NPL, the net NPL ratio is -0.3 percent,” he said.

The BSP chief said banks are reasonably profitable with a return on equity at 10 percent.

Espenilla added Philippine banks are well capitalized with a capital base exceeding the BSP’s and international thresholds.

“This puts the Philippine banking system in a position of strength that will enable it to meet the funding requirements of the growing economy while maintaining safeguards and buffers against risks,” he said.