The Finance Department said over the weekend the country’s banking sector is in good shape, after preliminary central bank data showed the better non-performing loan ratio of universal and commercial banks in 2015 despite the increase in lending.
Finance Undersecretary and chief economist Gil Beltran said the improvement in the bank’s ratio of non-performing loans, or bad loans, was backed by precautionary measures taken by lenders to ensure good quality lending.
Preliminary data from the Bangko Sentral ng Pilipinas showed that the ratio of the gross non-performing loans of universal and commercial banks against their total portfolio stood at 2.15 percent as of end 2015.
The U/KBs’ NPL ratio improved from 2.40 percent at the end of 2014 amid the 11.96 percent expansion in total loan portfolio.
Lending by universal and commercial banks in 2015 increased to P6.529 trillion from the P5.83 trillion in 2014. The banks’ gross NPLs, meanwhile, slightly increased to P136.79 billion in end December 2015 from P134.83 billion recorded at the end of 2014.
“The increase in deposits, total assets, and interest income, reflect that the country’s banking sector is in good shape,” Beltran said.
Total assets of the Philippine banks at the end of 2015 sustained its upward trend to P12.08 trillion, up 8.2 percent from 2014. Deposits rose 8.3 percent to P9.23 trillion.
“The banking system is growing faster than the economy, exceeding the nominal GDP [gross domestic product] growth of 5.0 percent,” Beltran said.
Central bank data also showed that the deposit ratio stood at 70.74 percent, a 2.31-percentage point increase from 2014, but lower than the peak 2012 level of 73.49 percent.
“This reflects better utilization of funds and more economically viable activities while maintaining sufficient buffer,” Beltran said.
Meanwhile, the real and other properties acquired component stood at P103 billion after an annual 6 percent decrease. Year-end net interest income was at P531 billion, up 9.5 percent from a year ago.
Return on assets stood at 1.17 percent, while return on equity was at 9.48 percent. Both ratios follow a downward trend. The RoE net of the GDP price deflator was 10.03 percent in 2015, higher than 9.58 percent in 2014, which implied stronger financial position despite lower lending spread, Beltran said.
“In addition, the risk-based CAR [capital adequacy ratio] for the past 3 years has been significantly greater than the 10 percent minimum imposed by the BSP over universal and commercial banks. The presence of adequate capital to cover for both credit and market risk will aid in withstanding volatilities caused by the financial market,” Beltran said.
