Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. remains upbeat on the growth prospects of the domestic banking industry, saying the sector will continue to grow and support economic expansion.
Espenilla said the currently strong banking system was a product of decades of hard work, commitment to reforms and decisiveness.
“Moving forward, we expect further expansion of the banking system, sound asset quality, adequate liquidity and rising capital buffers,” Espenilla said in a speech during the 25th-anniversary celebration of BSP on the night of July 27.
He said total assets of the banking system increased 12.2 percent year-on-year as of end-May 2018. The expansion was funded by the 12.5-percent growth in deposits mostly deployed to lending activities. Loans were broad-based across various borrower and industry types.
“The banking system is healthy and profitable. Overall profitability is buoyed by the increase in core income from lending activities. With staunch commitment and consistent dedication, capitalization of the overall banking system is now above the regulatory thresholds,” Espenilla said.
He said banks continued to adhere to sound credit underwriting standards as shown by the very satisfactory quality of the banking system’s loan portfolio.
Espenilla said banks were well prepared to bear credit losses as they set up adequate provisions for possible defaults. Banks were able to maintain a non-performing loans coverage ratio of over 100 percent.
“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 said.
He said to ensure that the resilience and strength of the industry would continue, the Bangko Sentral would pursue continuous improvement on the regulatory front aligned with global standards and best practices.
Among these are the rolling-out of the enhanced liquidity risk management framework, where the regulator would prescribe guidelines on the adoption of accounting standards to promote transparency and fairness in both financial and prudential reporting.
The BSP is also continuously working to ensure that financial industry participants are sensitive to, and proactive in, addressing emerging cyber threats.
The BSP is now capable of producing 43 million pieces of high-quality currency notes per month, up from just 6.5 million pieces 25 years ago. It also produces 200 million pieces of coins a month.
