The country’s financial system sustained its strength and resilience in the first half amid the risks and challenges posed by the global health crisis, the Bangko Sentral ng Pilipinas said Tuesday.
The finding is based on the report on the Philippine financial system for the first semester, which assessed the strengths and sources of vulnerabilities of the banking system. It said that a set of financial soundness indicators suggested that the banking system remained sound and stable even during the pandemic.
“In the first semester of 2021, the banking system displayed continued growth in assets and deposits and posted sufficient capital and liquidity buffers. This enabled the banking system to support the country’s financing needs,” BSP Governor Benjamin Diokno said.
“The acceleration of digital transformation reinforced banks’ continued delivery of financial products and services during the pandemic,” Diokno said.
Total assets of the banking system rose to P19.811 trillion as of end-June and represented 107.2 percent of the country’s annualized nominal gross domestic product.
The asset expansion was primarily channeled to lending and investment activities while funding was mainly sourced from deposits, followed by capital and bonds. The year-on-year growth rate in bank assets of 6.4 percent was slower than the 8.0 percent growth rate in June but higher than the 6.1-percent growth rate in December 2020.
Across banking groups, universal and commercial banks made up the bulk of the banking system’s total assets at P18.328 trillion (92.5 percent share), while thrift banks and rural and cooperative banks’ share stood at P1.186 trillion (6.0 percent share) and P296.5 billion (1.5 percent share), respectively.
Loans remained the largest portion of the banking system’s asset mix at 52.4 percent. This was followed by financial assets other than loans and cash and due from banks with 26.2 percent share and 17.8 percent share, respectively.
The report highlighted the satisfactory performance of the foreign currency deposit system, trust entities, quasi-banks and other non-bank financial institutions during the period under review.
Diokno said given the continuing uncertainty posed by the global pandemic, the BSP would continue to monitor risks and vulnerabilities that might put undue pressure on the financial system.
The comprehensive analysis will be complemented by initiatives aimed at strengthening risk governance, promoting responsible innovation and advancing the sustainability agenda in the Philippine financial system, he said.