THE Philippine banking system remains strong, with balance sheets marked by a sustained growth in assets and deposits, the Bangko Sentral ng Pilipinas said in a report over the weekend.
Banks’ total deposits as of end-January 2016 stood at P7.3 trillion, 11.3 percent or P0.7 trillion higher than in the same period a year ago. The growth in deposits outpaced the 8.9-percent expansion posted in the previous quarter.
“Demand, savings, and time deposits expanded by 17.4 percent, 13.7 percent, and 1.5 percent, respectively,” the Bangko Sentral said.
Foreign currency deposits owned by residents rose 12.5 percent to P1.5 trillion year-on-year.
Meanwhile, banks’ initiatives to improve their asset quality along with prudent lending regulations helped maintain the gross non-performing loan ratio below the pre-Asian crisis level of 3.5 percent.
The improvement reflected the combined effect of GNPL decrease of P2.8 billion, from P139.7 billion in the third quarter of 2015 to P136.9 billion in the fourth quarter.
Total resources of the banking system grew 7.6 percent to P12.4 trillion as of end-December 2015 from the P11.5 trillion a year ago. Total resources as a percent of gross domestic product stood at 93.4 percent.
Banks also remained well capitalized amid tighter capital requirements. The industry’s capitalization was predominantly composed of common equity Tier 1, the highest quality among instruments eligible as bank capital.
The CET 1 of universal and commercial banks increased quarter-on-quarter to 12.99 percent and 13.92 percent of risk weighted assets from 12.87 percent and 13.89 percent in the last quarter on both solo and consolidated bases, respectively.
The capital adequacy ratio—a measurement of financial strength—of universal and commercial banks on a consolidated basis at 16.4 percent was higher than those of Malaysia (16.1 percent) and South Korea (13.9 percent), but lower compared with those of Indonesia (20.6 percent) and Thailand (17.4 percent).
Meanwhile, the number of banking institutions (head offices) declined to 632 as of end-December 2015 from the year- and quarter-ago levels of 648 and 635, respectively. The Bangko Sentral said reduction was an indication of consolidation as well as the exit from the industry of weaker players.
By banking classification, banks (head offices) consisted of 40 universal and commercial banks, 68 thrift banks and 524 rural banks. The operating network—head offices and branches—of the banking system expanded to 10,756 in the fourth quarter 2015 from 10,361 in the same period a year ago due mainly to the continuous expansion program of banks.