Philippine bank profits down to P54 billion in Q1

MANILA, Philippines — Philippine banks reported a three percent decline in net income to P53.98 billion in the first quarter from P55.68 billion in the same period last year as the value of bad debts written off by the banking industry tripled during the review period, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data from the BSP showed the operating income of local banks gained by 5.4 percent to P232.41 billion from January to March compared to P220.52 billion in the same period last year.

Banks’ provisions for credit losses on loans and other financial assets declined by about six percent to P24.21 billion in the first quarter from P25.75 billion in the same quarter last year.

However, the amount of bad debts written off by Philippine banks tripled to P3.52 billion in the first quarter from P1.15 billion in the same quarter last year.

The BSP data further showed the net interest income of banks operating in the country increased by 4.5 percent to P177.2 billion from P169.49 billion.

Interest earnings declined by 6.9 percent to P210.75 billion from P226.43 billion, while interest expense plunged by 41.1 to P33.34 billion from P56.62 billion.

The industry’s non-interest income went up by 8.2 percent to P55.21 billion from P51.03 billion. Fees and commission income booked a double-digit 12.3 percent increase to P28.44 billion from P25.32 billion, offsetting the 3.8 percent decline in trading gains to P20.85 billion from P21.68 billion.

The non-interest expenses of the industry also booked a double-digit 13.8 percent growth to P144.18 billion from P126.67 billion.

Earnings of the entire banking sector slumped to a four-year low of 32.7 percent to P155.22 billion in 2020 from P230.67 billion in 2019 as the industry’s provision for potential loan losses   almost quadrupled.

Last year’s decline ended four straight years of profit growth for the banking sector and was the lowest since the P153.31 billion booked in 2016. The industry’s earnings last contracted slightly to P135.34 billion in 2015 from P135.57 billion in 2014.