Big banks book 6.8% profit growth

MANILA, Philippines — Big banks in the Philippines booked a 6.8 percent growth last year despite the sharp drop in the industry’s trading income, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Preliminary data released by the central bank showed profits of universal and commercial banks amounted to P146.33 billion last year, P9.38 billion higher compared to the P136.95 billion recorded in 2016.

Interest earnings of big banks went up 16.9 percent to P474.58 billion from P405.97 billion, while interest expense rose 15.3 percent to P104.94 billion from P91.03 billion. This resulted in a double-digit growth of 17.3 percent in net interest income to P369.38 billion from P314.88 billion.

On the other hand, non-interest income slipped 5.44 percent to P121.84 billion from P128.86 billion as trading income plunged 28.3 percent to P36.05 billion from P50.28 billion.

Due to the volatile equities and financial markets, data showed profit from the sale or redemption of securities plummeted by 68.1 percent to P7.94 billion last year from P24.88 billion in 2016.

Likewise, gains from foreign exchange transactions fell 41.6 percent to P3.93 billion from P6.73 billion, while foreign exchange profits plunged 38.5 percent to P7.04 billion from P11.45 billion as monetary authorities allowed the moderate and gradual weakening of the peso against the dollar.

Non-interest expenses of big banks increased by 11.4 percent to P311.77 billion last year from P279.86 billion in 2016.

The industry is dominated by family-owned conglomerates led by BDO Unibank of retail and banking magnate Henry Sy, Metrobank Group of taipan George SK Ty, Ayala-led Bank of the Philippine Islands, Security Bank of the Dy family, Philippine National Bank of tobacco and airline magnate Lucio Tan, Sy-led China Bank, Aboitiz-owned Union Bank, and Yuchengco-led Rizal Commercial Banking Corp.

Likewise, the BSP said the profits of thrift banks jumped 29.1 percent to P17.94 billion last year from P13.89 billion in 2016.

In a speech during the BSP’s Annual Reception for the Banking Community last month, BSP Governor Nestor Espenilla Jr. said the Philippine banking system is safe and sound, with robust expansion in credit and demonstrating capital adequacy, asset quality, liquidity, and profitability.

“A sound and liquid financial system also provided support to Philippine economic activity in 2017. Banks’ balance sheets expanded with a double-digit growth in assets and deposits,” he said.

The BSP chief added credit continued to flow steadily to productive sectors and sustained efforts by the central bank and the financial sector to enhance liquidity and risk management practices kept threats to financial stability at bay.