The Bangko Sentral ng PIlipinas said that, with the banking system at its core, the financial system “remains resilient amid evolving domestic and global environment.”
“The Philippine banking system sustained its growth story, maintained its solid footing as evidenced by its satisfactory asset quality, ample liquidity and solvency, profitable operations and streamlined physical network,” BSP said in latest Philippine Financial System Report.
The report furthered that the universal and commercial bank (U/KB) industry remained as the driver of the banking system. For the thrift bank (TB) and rural and cooperative bank (R/CB) industries, the retail segment had the largest share of lending. The R/CBs reported high micro, small, medium enterprise (MSME) and agri-agra compliance ratios as compared to the U/KBs.
“The banking system continued to expand its geographic footprint with the U/KBs having the largest share of branches and other offices. By contrast, these R/CBs had the highest number of head offices and established the most branchlite units,” BSP said.
Positive performance was evident across banking groups which posted sustained growth in assets, loans, deposits and capital. The universal and commercial bank industry primarily financed the growth of the major economic sectors such as real estate, wholesale and retail trade and manufacturing. Meanwhile, the thrift bank and rural and cooperative bank industries supported the retail lending segment, particularly in providing loans to consumers, the micro, small and medium enterprises and the agri-agra sector.
The banking system’s total assets, which was channeled to upbeat lending and investment activities with stable funding from resident deposits, recorded a double-digit growth rate.
The banking system’s total assets climbed to P16,911.4 billion as of end-December 2018, 11.5 percent higher than the level registered as of end-December 2017. Banks’ total assets strengthened to 97.0 percent of the nominal GDP as of end-December 2018 from 94.9 percent as of endJune 2018 and 95.9 percent as of end-December 2017.
By industry, U/KBs held the bulk of the banking system’s total assets at P15,421.1 billion while the total assets of TBs and R/CBs stood at P1,244.7 billion and P245.6 billion, respectively.
Meanwhile, total industry assets of U/KBs, TBs and R/CBs posted YoY growth rates of 12.0 percent, 6.5 percent and 7.2 percent, respectively.
The financial soundness indicators affirm that the banking system is stable and resilient despite global uncertainties.
Capital, mainly comprised of common equity and retained earnings, remained well above domestic and global benchmarks; credit quality was satisfactory notwithstanding double-digit loan growth; profits generated primarily from core income were at record high; and the banks’ high quality liquid assets were sufficient to absorb shocks while adequately providing the financing needs of the growing economy.
The BSP’s surveillance activities are complemented with proactive engagement with supervised financial institutions promoting effective management and monitoring of incipient risk to the system.
Likewise, foreign bank branches and subsidiaries, the foreign currency deposit system, trust operations, quasi-banks and other non-bank financial institutions all registered positive growth contributing to the resilience of the overall financial system.
“The outlook on the banking system remains positive given relatively robust macroeconomic performance, adequate liquidity, as well as rising capital buffers and opportunities presented by the growing economy and technological innovations,” BSP said.
Moreover, the report showed that the enactment of Republic Act (R.A.) No. 11211, which amends the Charter of the Bangko Sentral ng Pilipinas, and R.A. No. 11127, which fosters the efficiency of domestic financial transactions, further bolsters the BSP’s capability to promote the stability of the financial system as required by the fast-evolving market landscape. (Malaya)