The domestic banking industry remained resilient in 2022, marked by the sustained growth in assets, deposits and profit, along with adequate capital and liquidity buffers, the Bangko Sentral ng Pilipinas said in a report over the weekend.
“The banks’ asset growth, funded mainly by deposits, enabled the banking system to continue to support the economy’s recovery through improved credit activity,” the BSP said in its latest report on the financial system.
“Importantly, the financial soundness indicators on capital adequacy, asset quality, profitability, liquidity and sensitivity to market risk point to the continued stability and resilience of the banking system despite tighter financial conditions,” it said.
Data showed that total assets of the banking system last year grew by 10.7 percent to P23.04 trillion, faster than the 7-percent increase in 2021.
Universal and commercial banks held the largest share of the total assets of the banking system at 94.2 percent (P21.70 trillion). Thrift banks and rural and cooperative banks each held around 4.2 percent (P968.3 billion) and 1.6 percent (P372.5 billion), respectively.
Lending continued to support economic recovery as gross loans climbed 10.8 percent to P12.65 trillion in 2022, faster than the 4.8-percent growth in 2021.
Bank loans went mainly to real estate activities (18.3-percent share, P2.3 trillion), household consumption (11.0 percent, P1.38 trillion), wholesale and retail trade (10.9 percent, P1.37 trillion), manufacturing (10.2 percent, P1.28 trillion), electricity, gas, steam and air-conditioning supply (9.6 percent, P1.29 trillion) and financial and insurance activities (8.3 percent, P1.05 trillion).
The BSP said that alongside the improvement in credit activity, the banking system’s non-performing loan ratio further eased to 3.2 percent in 2022 from the 4.0 percent in 2021.
This was accompanied by high NPL coverage ratio of 107.0 percent, increasing from the 87.7 percent in 2021.
The NPL ratio is expected to remain in single-digit and to gradually return to pre-pandemic levels.
Robust growth in deposits mirrored the economy’s recovery and the depositors’ continued confidence in the banking system. In 2022, deposits grew by 9.4 percent to ₱17.77 trillion, faster than the 9.0 percent in 2021.
These deposits were mostly peso- denominated (84.8-percent share) and generated from resident individuals (45.6 percent) and private corporations (33.4 percent), indicating domestic orientation and stability of banks’ funding source.
Strong capital position was sustained by the banking system in 2022 providing further cushion against shock. Total capital increased by 5.1 percent to P2.79 trillion, slower than the 5.9 percent in 2021.