Insured deposits drop to all-time low in Q1

MANILA, Philippines — Insured accounts in local banks sank to an all-time low of 20.3 percent in the first quarter despite the increase in deposits made during the period.

Based on data from the Philippine Deposit Insurance Corp. (PDIC), banks’ deposit liabilities from January to March grew by roughly eight percent to P14.98 trillion compared to P13.89 trillion during the same period last year.

As such, the volume of insured deposits rose by nearly five percent to P3.04 trillion from P2.87 trillion, according to the PDIC.

However, the PDIC reported this only covers 20.3 percent of the deposit liabilities in banks, the lowest since the agency began bookkeeping in 2011. Previously, the record low was registered in December last year, when insured accounts declined to 20.65 percent.

In the first quarter, insured demand deposits in peso accounts slid to 11.41 percent from 12.34 percent a year ago. Likewise, insured demand deposits in foreign currency accounts dipped to 4.95 percent from 5.31 percent.

Insured savings deposits in peso plunged to 32.4 percent from 34.5 percent, while in foreign currency fell to 20.59 percent, from 21.03 percent.

On the other hand, insured time deposits in peso went down to 9.24 percent from 9.45 percent, while in foreign currency waned to 8.75 percent from 8.87 percent.

By category, rural banks recorded the largest decline in insured deposits to 59 percent in the first quarter, from 63 percent during the same period last year. Similarly, insured deposits in commercial and thrift banks slipped to 19.12 percent and 29.82 percent from 19.45 percent and 29.97 percent, respectively.

According to the Bangko Sentral ng Pilipinas, deposits made in banks jumped by close to eight percent to P11.8 trillion in end-March as Filipinos preferred to save cash in preparation for what appears to be a protracted fight against the pandemic. With increased savings, bank assets now total P20 trillion, or 112 percent of the economy.

The PDIC, an attached agency of the Department of Finance, serves as an insurer for deposits entered into banks for up to P500,000 per account.

It also acts as a receiver in rehabilitating the operations of struggling banks and liquidating the assets of shuttered ones.