MANILA, Philippines — Assets of Philippine banks booked a double-digit 10.2 percent growth to hit a record P16.1 trillion in the first half of the year from P14.58 trillion in the same period last year, data from the Bangko Sentral ng PIlipinas (BSP) showed.
BSP Governor Nestor Espenilla Jr. said the expansion was fueled by the steady growth in deposits mostly deployed to lending activities that recorded a broad-based expansion across various borrower and industry types.
He said reforms put in place by the BSP, along with the banks’ commitment to improve their ability to manage risks, have resulted in significant improvements in the quality of banks’ assets and loan portfolios.
“Reforms through the years have also bolstered capitalization – overall bank capitalization is comfortably above local and international standards. Bank loans continue to expand at double-digit rates,” he said.
Through the years, Espenilla said the Philippines has built a banking system that is resilient, robust, and responsive.
“The banking system is healthy and profitable. Overall profitability is buoyed by the increase in core income from lending activities,” he said.
Latest data showed profits of big banks climbed 7.7 percent to P77.36 billion from January to June this year compared with P71.84 billion recorded in the same period last year.
According to Espenilla, the capitalization of the overall banking system is now above the regulatory threshold and local banks are prepared to bear credit losses via adequate provisions for possible defaults.
“Moving forward, we expect further expansion of the banking system, sound asset quality, adequate liquidity and rising capital buffers. The trajectory for profit growth will continue, driven mainly by strong growth outlook, upbeat lending activities, product innovations, and more cost-efficient and technology-enabled operations,” he added.
The industry is dominated by family-owned conglomerates led by retail and banking magnate Henry Sy with BDO, taipan George SK Ty with the Metrobank Group, Ayala-led Bank of the Philippine Islands, tobacco and airline magnate Lucio Tan with Philippine National Bank, Security Bank of the Dy family and MUFG of Japan, Sy-led China Bank, Aboitiz-owned Union Bank, and Yuchengco-led Rizal Commercial Banking Corp.
As the main provider of credit to key production sectors, the banking system is key to the Philippine growth story.