Profit of Phl banks jumps to P122.7 billion

MANILA, Philippines — The local banking industry is well on its way to recovery in terms of profitability as earnings jumped by 43 percent in the first half, but Moody’s Investors Service believes banks in the Philippines are still vulnerable as the country struggles to fully reopen the economy.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed the net income of Philippine banks amounted to P122.7 billion in end-June, P36.82 billion higher than last year’s P85.85 billion.

After a massive jump in allowance for bad debts as more borrowers defaulted on loan payments due to the impact of the pandemic, provisions for credit losses on loans and other financial assets plunged by 41.4 percent to P62.27 billion from January to June compared to P106.28 billion in the same quarter last year.

However, the amount of bad debts written off by Philippine banks more than tripled to P4.94 billion in the first half from P1.44 billion a year ago due to the relief measures mandated under Republic Act 11469 or the Bayanihan to Act as One Act (Bayanihan 1) and RA 11494 or the Bayanihan to Recover as One Act (Bayanihan 2).

The central bank data further showed the total operating income of banks slipped by 1.2 percent to P451.75 billion from P457 billion as the industry’s net interest income decreased by 3.4 percent to P325.58 billion from P337.17 billion.

The banking sector’s non-interest income went up by 5.2 percent to P126.16 billion in the first semester from P119.91 billion a year ago. Fees and commission income surged by 20.7 percent to P50.99 billion from P42.22 billion, offsetting the 5.9 percent decline in trading gains to P66.35 billion from P70.55 billion.

The non-interest expenses of banks inched up by 3.2 percent to P253.82 billion in the first half from P246.03 billion last year.