Sunday, August 14, 2022
manilastandard.net
ADVERTISEMENT
  • About
  • News
    • Top Stories
    • National
    • World News
    • Pinoy Abroad
    • Features
  • Opinion
    • Editorial
    • Columns
    • Soundbytes
  • LGUs
    • NCR
    • Luzon
    • Visayas
    • Mindanao
  • Business
    • Corporate
    • Economy & Trade
    • Stocks
    • Money
    • Agri & Mining
    • Power & Tech
    • IT & Telecom
  • Sports
    • Basketball
    • Volleyball
    • Fightsports
    • Active
    • Sports Plus
    • One Championship
    • Columns
  • Entertainment
    • TV & Movies
    • Celebrity Profiles
    • Music & Concerts
    • Digital Media
    • Columns
  • Lifestyle
    • Food
    • Culture & Media
    • Fashion
    • Health and Home
    • Leisure
    • Shopping
    • Columns
  • Others
    • Pets
    • Pop.Life
      • Newsmakers
      • Hangouts
      • A-Pop
      • Post Its
      • Performances
      • Malls & Bazaars
      • Hobbies & Collections
    • Technology
      • Gadgets
      • Computers
      • Business
      • Tech Plus
    • MS ON THE ROAD
      • Sedan
      • SUV
      • Truck
      • Bike
      • Accessories
      • Motoring Plus
      • Commuter’s Corner
    • Home & Design
      • Residential
      • Commercial
      • Construction
      • Interior
    • Spotlight
    • Gallery
      • Photos
      • Videos
    • Events
      • Seminars
      • Exhibits
      • Community
    • Biyahero
      • Travel Features
      • Travel Reels
      • Travel Logs
  • Advertise with Us
No Result
View All Result
  • About
  • News
    • Top Stories
    • National
    • World News
    • Pinoy Abroad
    • Features
  • Opinion
    • Editorial
    • Columns
    • Soundbytes
  • LGUs
    • NCR
    • Luzon
    • Visayas
    • Mindanao
  • Business
    • Corporate
    • Economy & Trade
    • Stocks
    • Money
    • Agri & Mining
    • Power & Tech
    • IT & Telecom
  • Sports
    • Basketball
    • Volleyball
    • Fightsports
    • Active
    • Sports Plus
    • One Championship
    • Columns
  • Entertainment
    • TV & Movies
    • Celebrity Profiles
    • Music & Concerts
    • Digital Media
    • Columns
  • Lifestyle
    • Food
    • Culture & Media
    • Fashion
    • Health and Home
    • Leisure
    • Shopping
    • Columns
  • Others
    • Pets
    • Pop.Life
      • Newsmakers
      • Hangouts
      • A-Pop
      • Post Its
      • Performances
      • Malls & Bazaars
      • Hobbies & Collections
    • Technology
      • Gadgets
      • Computers
      • Business
      • Tech Plus
    • MS ON THE ROAD
      • Sedan
      • SUV
      • Truck
      • Bike
      • Accessories
      • Motoring Plus
      • Commuter’s Corner
    • Home & Design
      • Residential
      • Commercial
      • Construction
      • Interior
    • Spotlight
    • Gallery
      • Photos
      • Videos
    • Events
      • Seminars
      • Exhibits
      • Community
    • Biyahero
      • Travel Features
      • Travel Reels
      • Travel Logs
  • Advertise with Us
No Result
View All Result
manilastandard.net
No Result
View All Result
Home Spotlight Reopening: PH Economy on the Mend

Local banks poised to survive crisis despite rising bad loans

Julito G. RadabyJulito G. Rada
August 24, 2021, 1:40 am
in Reopening: PH Economy on the Mend
Reading Time: 5 mins read
A A
74
SHARES
Share on FacebookShare on TwitterShare on Email

Philippine banks remain in good standing despite rising bad loans, as many clients face financial difficulties because of the repeated lockdowns and mobility restrictions.

Results of the latest Banking Sector Outlook Survey for the first semester of 2021 show that banks expect double-digit growth in assets, loans, investments, deposits and net income in the next two years.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno
Bangko Sentral ng Pilipinas Governor Benjamin Diokno

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the upbeat expectations of the banking system was a “testament to its confidence in the strong medium-term prospects of the country’s economy.”

Local lenders also intend to maintain their Basel capital and liquidity ratios at levels higher than domestic and global standards to promote institutional stability and strengthen capacity to support requirements of a growing economy.

Meanwhile, majority of the survey respondents expect their non-performing loan ratio to exceed 5 percent in the next two years.

ADVERTISEMENT

Universal and commercial banks see their NPL ratio settling between 3.0 percent and 6.5 percent in the next two years.

This is, however, accompanied by greater prudence in the management of credit risk by the industry as a higher number of banks intend to report NPL coverage ratio of more than 50.0 percent to 100.0 percent.

“The banks’ projections are consistent with the BSP’s NPL estimates for the year 2021.  The enactment of the Financial Institutions Strategic Transfer Act as well as the issuance of its implementing rules and regulations in the first semester of 2021 will help limit build-up of NPLs in the financial system,” Diokno said.

Banks also anticipate restructured loans ratio to be higher than 5.0 percent from earlier projections of between 3.0 percent and 5.0 percent of loans.  This reflects continued efforts of banks to grant financial relief to their borrowers through modifications in their loan payment terms.

Financial technology

Banks now recognize the need to integrate technology in achieving their business objectives and prioritize the digitalization of products and services for strategic efficiency in the next two years.

Mindful of cyberthreats following the lockdown and remote working arrangements, more than half of the respondent banks are ‘prepared’ to handle and manage cyberthreats.

Lastly, the survey results show a distinct shift in organizational focus towards sustainable financing. A high proportion of banks consistently view sustainable financing as an important strategic objective.

As such, around 71.3 percent of respondents plan to finance sustainable projects on agriculture, transportation, water supply management and solar power in the next two years.

The Philippine banking system is projected to withstand the legacy risks and challenges of the COVID-19 pandemic within the next two years on account of stable and sound capital and liquidity buffers, ample loan loss reserves, good earnings performance and prudent risk governance.

The survey provides insights of bank management on the strategic direction of the industry and emerging risks and trends. This is a part of BSP’s surveillance tools to promote the resilience of the banking system.

Key numbers

BSP data show that total assets of the Philippine banking system increased by 6.5 percent year-on-year, albeit with decelerated growth, to P19.3 trillion as of end-February 2021. Asset expansion remained positive and was funded by deposit generation, bond issuances and capital infusion.

By banking group, universal and commercial banks had the biggest share of the total assets of the banking system at 92.8 percent (P17.9 trillion), followed by thrift banks at 5.8 percent (P1.1 trillion) and rural and cooperative banks at 1.4 percent (P0.3 trillion).

The BSP said the tepid credit growth of the banking system was expected, as the pandemic-induced recession in the real sector caught up and weighed on the financial sector.

Gross total loan portfolio declined year-on-year by 3.0 percent to P10.6 trillion as of end-February 2021, slower than the 10.2 percent growth rate posted in February 2020

Meanwhile, the bank credit-to-GDP (annualized, nominal) ratio stood at 60.5 percent as of end-December 2020.

As a result of the BSP’s monetary policy easing through reduction in key policy rates and reserve requirements, the overall mean and median interest rates on loans of banks also showed a general downtrend from end-March 2020 (start of the enhanced community quarantine) to end-February 2021.

The banking system’s overall mean weighted average interest rates declined to 4.9 percent as of end-February 2021 from 8.2 percent as of end-March 2020 and 7.0 percent as of end-June 2020. Banks’ median WAIR similarly declined to 4.4 percent as of end-February 2021 from 5.8 percent as of end-March 2020 and 5.4 percent as of end-June 2020.

A consistent declining trend was generally observed specifically in both mean and median WAIR of loans to private corporations, agrarian reform and other agricultural loans, small and medium enterprise loans and loans to individuals.

NPL loan ration

Amid the COVID-19 pandemic, the banking system’s non-performing loan ratio widened to 4.1 percent as of end-February 2021 from 2.2 percent a year earlier.

The increase in NPLs was matched by higher loan loss provisioning. Banks began recognizing loan loss provisions since the start of 2020 to provide cushion in anticipation of the adverse impact of the

pandemic on their loan portfolios. This resulted in a high NPL coverage ratio of 86.6 percent as of end-February 2021.

Across banking groups, U/KBs posted a high NPL coverage ratio of 95.3 percent. Meanwhile, the expected credit losses of TBs and RCBs remained well-covered, with NPL coverage ratios of 51.9 percent and 55.5 percent, respectively.

The banking system’s funding mainly came from deposits at 76.9 percent (P14.9 trillion), capital at 12.7 percent (P2.5 trillion) and bonds payable at 3.6 percent (P0.7 trillion).

Total bank deposits increased by 9.0 percent year-on-year to P14.9 trillion as of end-February 2021.

By banking group, U/KBs had the largest share of deposit liabilities at 92.9 percent (P13.8 trillion), followed by TBs at 5.7 percent (P0.9 trillion) and RCBs at 1.4 percent (P0.2 trillion) as of end-February 2021.

The U/KB industry posted a high year-on-year deposit growth of 10.0 percent, above the PBS deposit growth of 9.0 percent during the period. Meanwhile, the TB industry reported a decline of 5.0 percent in deposit growth during the same period.

Bonds payable went up by 15.0 percent year-on-year to P0.7 trillion as of end-February 2021.

The capital adequacy ratios of the U/KB industry on solo and consolidated bases are well above the minimum thresholds set by the BSP at 10 percent and the Bank for International Settlements at 8 percent.

As of end-December 2020, the CARs of the U/KB industry stood at 16.6 percent and 17.1 percent on solo and consolidated bases.

While the banking system remained on positive bottomline, net profit declined by 32.7 percent year-on-year to P155.2 billion in 2020. Net profit was weighed down by the increase in the

provision for credit losses on loans and other financial assets amounting to P211.6 billion for the year-ended December 2020.

Banks’ physical network continued to expand. The number of bank offices grew to 13,056 as of end-February 2021, composed of 532 head offices and 12,524 other offices.

Tags: Bangko Sentral ng PilipinasBanking Sector Outlook SurveyBSP Governor Benjamin DioknoPhilippine banks
ADVERTISEMENT
Julito G. Rada

Julito G. Rada

Related Posts

Reopening: PH Economy on the Mend

byManila Standard
October 25, 2021, 12:30 am
0
147
Reopening: PH Economy on the Mend

Read more

Green shoots emerge in PH as vaccination rate picks up

byJulito G. Rada
October 25, 2021, 12:25 am
0
132
Green shoots emerge in PH as vaccination rate picks up

Green shoots are beginning to emerge despite the lingering risks posed by the COVID-19 pandemic to the global economy and...

Read more

Economic reopening allows firms to absorb more workers

byOthel V. Campos
October 25, 2021, 12:20 am
0
135
Economic reopening allows firms to absorb more workers

Amid a slow and painful journey to recovery, the government is optimistic about building back what it lost to the...

Read more

PH economy now ready for full reopening despite virus

byOthel V. Campos
October 25, 2021, 12:15 am
0
135
PH economy now ready for full reopening despite virus

A full-scale reopening of the the economy while battling the pandemic at the same time is the right formula for...

Read more

Sustainable recovery hinges on critical government response

byJulito G. Rada
October 25, 2021, 12:10 am
0
129
Sustainable recovery hinges on critical government response

Accelerating the COVID-19 vaccination rollout, subsidizing booster shots, managing risks better and implementing the economic recovery program will all help...

Read more

Macro-economic fundamentals provide shield

byManila Standard Business
October 25, 2021, 12:05 am
0
130
Macro-economic fundamentals provide shield

The Philippine economy is far from collapsing despite the onslaught of COVID-19. The past restrictive lockdown measures may have taken...

Read more

Stories you may like

  • People …are talking about Liza Soberano

    Supermodel son is Philippine bet in Manhunt International

    5935 shares
    Share 2374 Tweet 1484
  • Judgments and their execution

    1266 shares
    Share 506 Tweet 317
  • Another oil price rollback likely as world economy further stalls

    1190 shares
    Share 476 Tweet 298
  • Appeal to BBM and Acuzar

    932 shares
    Share 373 Tweet 233
  • Basilan solon wants barangay, SK polls reset to May 2024 to save P8b for gov’t

    854 shares
    Share 342 Tweet 214

Print Edition

View More

Recent Posts

  • Palace clears ES in sugar mess
  • COVID-19 uptick, less physical distancing up in F-2-F classes
  • Makati initiates local prevention vs. monkeypox
  • Government to reclaim P1.9 billion in scuttled chopper deal
  • Salman Rushdie stabbed, may lose an eye
  • 5.9 quake jolts part of Mindanao, Taal Volcano no big blast sign yet
  • PSA targets 50 million National IDs distributed by end of the year
  • DAR creates task force for speedy land distribution

Advertisement

Latest News

5.9 quake jolts part of Mindanao, Taal Volcano no big blast sign yet

byNash B. Maulana
August 14, 2022, 1:10 am
0
140
Vax wastage, infection surge feared in Odette-hit areas

A magnitude-5.9 earthquake rocked parts of Mindanao Saturday afternoon, with the epicenter located at Datu Blah Sinsuat in Maguindanao. It...

Read more

PSA targets 50 million National IDs distributed by end of the year

byManila Standard
August 14, 2022, 1:00 am
0
139

The Philippine Statistics Authority (PSA) on Saturday said it will speed up the production of Philippine Identification System (PhilSys) cards,...

Read more

DAR creates task force for speedy land distribution

byMaricel Cruz
August 14, 2022, 12:50 am
0
140
Online portal to accelerate digital shift of education system

The Secretary of Agrarian Reform ordered over the weekend the immediate subdivision of collectively titled lands to enable farmer-beneficiaries to...

Read more

BTA eyes better education setup, women’s health services in BARMM

byManila Standard
August 14, 2022, 12:40 am
0
133
Vax wastage, infection surge feared in Odette-hit areas

A member of the Bangsamoro Transition Authority (BTA) on Saturday vowed to prioritize improving the education system in the Bangsamoro...

Read more

CHR urges KWF to review order banning 5 ‘subversive’ books

byManila Standard
August 14, 2022, 12:30 am
0
151
CHR probes fatal shooting of teenager

The Commission on Human Rights (CHR) on Saturday urged the Komisyon sa Wikang Filipino (KWF) to review its order to pull...

Read more

Advertisement

ADVERTISEMENT
Facebook Twitter Instagram Youtube

ABOUT US

Manila Standard

Manila Standard website (manilastandard.net), launched in August 2002, extends the newspaper’s reach beyond its traditional readers and makes its brand of Philippine news and opinion available to a much wider and geographically diverse readership here and overseas.

Digital Edition

In tone and content, the online edition mirrors the editorial thrust of the newspaper. While hewing to the traditional precepts of fairness and objectivity, MS believes the news of the day need not be staid, overly long or dry. Stories are succinct, readable and written in a lively style that has become a hallmark of the newspaper.

Download – Today’s Paper

Search

No Result
View All Result

6th Floor Universal Re Bldg., 106 Paseo De Roxas cor. Perea Street, Legaspi Village, 1226 Makati City Philippines

Trunklines: 832-5554, 832-5556, 832-5558

© 2021 Manila Standard - Designed and Developed by Neitiviti Studios.

No Result
View All Result
  • About
  • News
    • Top Stories
    • National
    • World News
    • Pinoy Abroad
    • Features
  • Opinion
    • Editorial
    • Columns
    • Soundbytes
  • LGUs
    • NCR
    • Luzon
    • Visayas
    • Mindanao
  • Business
    • Corporate
    • Economy & Trade
    • Stocks
    • Money
    • Agri & Mining
    • Power & Tech
    • IT & Telecom
  • Sports
    • Basketball
    • Volleyball
    • Fightsports
    • Active
    • Sports Plus
    • One Championship
    • Columns
  • Entertainment
    • TV & Movies
    • Celebrity Profiles
    • Music & Concerts
    • Digital Media
    • Columns
  • Lifestyle
    • Food
    • Culture & Media
    • Fashion
    • Health and Home
    • Leisure
    • Shopping
    • Columns
  • Pop.Life
    • Newsmakers
    • Hangouts
    • A-Pop
    • Post Its
    • Performances
    • Malls & Bazaars
    • Hobbies & Collections
  • Technology
    • Gadgets
    • Computers
    • Business
    • Tech Plus
  • MS ON THE ROAD
    • Sedan
    • SUV
    • Truck
    • Bike
    • Accessories
    • Motoring Plus
    • Commuter’s Corner
  • Home & Design
    • Residential
    • Commercial
    • Construction
    • Interior
  • Spotlight
  • Gallery
    • Photos
    • Videos
  • Events
    • Seminars
    • Exhibits
    • Community
  • Biyahero
    • Travel Features
    • Travel Reels
    • Travel Logs
  • Pets
  • Advertise with Us

© 2021 Manila Standard - Designed and Developed by Neitiviti Studios.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Install Manila Standard Web App

Install App