Combined net income of universal and commercial banks in 2015 slightly declined from a year ago due to higher non-interest expenses, data from Bangko Sentral ng Pilipinas showed.
Bigger banks realized a net profit of P120.275 billion, one percent lower than P121.661 billion in 2014. However, the 2015 figure was significantly higher than the P87.336-billion net profit at the end of third quarter 2015.
Non-interest expenses—which include compensation and fringe benefits, taxes and licenses, fees and commission expenses, other administrative expenses, depreciation/amortization, and impairment losses—amounted to P252.584 billion as of end-December 2015. The figure was significantly higher than the P238.993 billion non-interest expenses a year ago.
Profits of universal and commercial banks came mainly from higher interest income. Data showed net interest income stood at P283.878 billion in 2015, higher than P261.750 billion a year ago.
Non-interest income reached P112.402 billion, lower than P127.495 billion a year ago.
The Philippines has 36 universal and commercial banks.
Earlier this month, Bangko Sentral said the non-performing loan ratio of universal and commercial banks as of end-October 2015 improved despite the increase in their total loan portfolio.
Data showed the ratio between the gross non-performing loans of universal and commercial banks and their total loan portfolio stood at 1.77 percent as of end-October 2015.
The U/KBs’ NPL ratio improved from the 1.82 percent reported at end-September last year amid a month-on-month decline in gross NPLs and an expansion in total loan portfolio. The industry’s NPL ratio has been below 2 percent since November 2014.
In October 2015, lending by universal and commercial banks increased to P5.35 trillion from the P5.24 trillion posted a month earlier. The banks’ gross NPLs, meanwhile, slightly declined to P94.52 billion in October from the P95.24 billion recorded a month earlier.
Aside from keeping the NPL ratio low, U/KBs continued to allocate substantial reserves as buffer for potential credit losses.
At end-October last year, the industry provisioned for 140.97 percent of its gross non-performing loans. The NPL coverage ratio registered at 139.74 percent a month earlier.
The U/KB industry’s gross NPLs also remained manageable across economic sectors as seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which represented 69.3 percent of the banks’ total loan portfolio in October 2015.
Bangko Sentral said the latest loan quality indicators showed that universal and commercial banks were adhering to high credit standards.
Bangko Sentral ng Pilipinas keeps track of the loan quality of U/KBs as part of its supervisory role to ensure the soundness of the banking system.