The Philippine banking system demonstrated strong growth in the first half of 2024, with increases in assets, loans, deposits and earnings, according to the Bangko Sentral ng Pilipinas.
It said the sector benefited from the country’s improving economic environment and ongoing banking reforms. Banks’ share of the financial system’s resources grew to 83.4 percent, enhancing their ability to support domestic economic growth by providing financial products and services to Filipino businesses and households.
“Banks remain the pillar of the Philippine financial system. The BSP’s financial reforms help sustain the resilience of the banking sector, enabling banks to take a bigger role in the domestic economy and ultimately improving the financial future of every Filipino,” said BSP Governor Eli Remolona Jr.
The banking system’s total assets reached P26.2 trillion as of June 2024, marking a year-on-year increase of 12.4 percent. This surpassed the 9.1-percent growth in June 2023 and the 11-percent pre-pandemic growth rate. The expansion was led by domestic deposits, with 81.6 percent of assets directed toward lending and investment.
Loan portfolios continued to grow, reflecting strong consumer and business confidence due to positive economic forecasts and solid macroeconomic fundamentals. Gross total loans rose 12.4 percent to P14.3 trillion, led by a 23.3-percent growth in consumer loans and a 12.1-percent rise in real estate loans. The real estate sector remained the largest loan recipient, accounting for 18.3 percent (or P2.6 trillion) of total loans.
Despite an increase in non-performing loans (NPLs), loan quality remained satisfactory. NPLs grew 14.8 percent to P502.4 billion in June 2024, up from P495.7 billion in May, with an NPL ratio of 3.5 percent, slightly above the 3.4 percent reported a year earlier.
The high-interest-rate environment, along with lingering post-pandemic challenges, contributed to the uptick in NPLs. However, easing inflationary pressures are expected to enhance borrowers’ repayment capacities.
Deposits saw notable growth, further bolstering the banking sector’s stability. Depositor confidence from individuals and corporations led to a 9.5-percent increase in deposits, reaching P19.5 trillion in June 2024.
Capital also strengthened, rising 10.6 percent from P2.9 trillion in June 2023 to P3.2 trillion. This increase was supported by profitable operations, with consolidated net earnings climbing 4.1 percent from P182.8 billion to P190.3 billion.
The sector maintained capital and liquidity buffers above both domestic and global standards, supporting growth and risk-taking activities.
