Banking sector sustains growth in H1

MANILA, Philippines — The Philippine banking system sustained its growth in the first semester of the year, reflecting the financial system’s resilience amid global volatilities and uncertainties, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

In a statement, the BSP said the banking system showed continued positive performance in the first semester on the back of financial sector reforms, strong macroeconomic fundamentals and positive investor sentiment.

“The Philippine financial system, with the banking system at its core, continues to provide financial intermediation to further boost the domestic economy,” the central bank said.

According to data from the BSP, the banking system’s total assets as of end-June expanded by 10.3 percent to P15.704 trillion from a year ago, mainly driven by loans which grew by more than 16 percent to P9.352 trillion.

Gross financial assets also increased by 15 percent to P3.237 trillion, while deposits grew by 10.3 percent to P12.15 trillion. The banking system’s capital also continued an upward trend, rising by 14.6 percent to P1.691 trillion.

As of end-June, banks have established a total network of 581 head offices and 11,485 other offices.

The banking system booked a total net income of P86 billion as of end-June, 5.8 percent higher than last year’s level. The BSP said banks’ profitability was buoyed by the 14.1 percent growth in their net interest income to P238.5 billion during the period.

“Overall, the double-digit year-on-year growth of the banking system’s assets, loans, investments, deposits, capital accounts and core income showcases resilience amid global volatilities and ensures another pillar to support the economy’s progress,” the BSP said.

“While the banking system continues to expand its reach to extend credit to borrowers, prudent lending resulted in satisfactory asset quality with non-performing loan ratio at a low of 1.9 percent as of end-June 2018,” it said.

The BSP said its financial soundness analysis of the banking sector—which includes capital adequacy, asset quality, earnings, liquidity and sensitivity to market risk—also showed the banking system remained stable in the first half.

However, the central bank assured it would continue to monitor risks to the system, particularly on lending.

“Intense supervisory engagement with banks should continue to supplement the close monitoring and surveillance activities currently being employed for these types of credit exposure,” the BSP said.

Meanwhile, the BSP said the foreign currency deposit system, trust operations, quasi-banks and other non-bank financial institutions also posted steady growth in the first half, contributing to the strong performance of the financial system.

The central bank said this dynamism in the financial system justified the strong positive outlook of presidents, chief executive officers and country managers on the sector based on the Banking Sector Outlook Survey.