Banking system’s total assets jump by 11% to PHP 26 trillion

The Philippine banking industry’s total assets jumped by 10.8% as of end-August, Bangko Sentral ng Pilipinas (BSP) data showed.

Preliminary data from the BSP showed banks’ combined assets rose to PHP 25.99 trillion as of end-August from PHP 23.46 trillion in the same period a year ago.

Month on month, total assets inched up by 0.2% from PHP 25.93 trillion as of end-July.

Banks’ assets are mainly supported by deposits, loans, and investments. These include cash and due from banks as well as interbank loans receivable (IBL) and reverse repurchase (RRP), net of allowances for credit losses.

The banking sector’s total loan portfolio inclusive of IBL and RRP climbed by 10.5% to PHP 13.82 trillion as of end-August from PHP 12.51 trillion in the same period a year ago.

Net investments, or financial assets and equity investments in subsidiaries, increased by 6.6% to PHP 7.41 trillion as of end-August from PHP 6.95 trillion a year prior.

Cash and due from banks stood at P2.65 trillion as of end-August, up by 3.9% from PHP 2.55 trillion a year earlier.

Net real and other properties acquired went up by 3.9% to PHP 111 billion from P106.8 billion a year ago.

Banks’ other assets surged by 48.1% to PHP 2 trillion at end-August from PHP 1.35 trillion a year earlier.

Meanwhile, the total liabilities of the banking system rose by 10.8% to PHP 22.73 trillion from PHP 20.52 trillion in the year-ago period.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher asset level as of end-August was due to continued growth in bank lending.

The latest data from the BSP showed outstanding loans of universal and commercial banks rose by 10.7% year on year to P12.25 trillion in August. This was its fastest growth rate in 20 months or since the 13.7% logged in December 2022.

Mr. Ricafort noted that banks’ asset growth is nearly twice the country’s latest gross domestic product (GDP) growth.

The Philippine economy grew by 6.3% in the second quarter, faster than the 5.8% growth in the first quarter and 4.3% a year ago.

“The continued growth in banks’ earnings that also added to banks’ capitalization may have also supported the latest growth in banks’ total assets,” he added.

The Philippine banking system’s combined net income rose by 4.1% year on year to PHP 190.26 billion in the first half.

Mr. Ricafort said that further policy rate cuts by the BSP and US Federal Reserve will also support loan activity.

The central bank could deliver 25-basis-point (bp) rate cuts at each of its two remaining meetings this year, BSP Governor Eli M. Remolona, Jr. earlier said.

The Monetary Board’s next policy review is on Oct. 16.

“The latest cut in banks’ reserve requirement ratio (RRR) and possible further reduction in RRR for the coming years would be another source of growth for banks’ loans, earnings, and total assets,” Mr. Ricafort added.

The BSP has announced its plans to cut big banks’ RRR to 7% from 9.5%, effective later this month.

Mr. Remolona has said that they are looking to reduce the RRR to zero within his term, which ends in 2029. – Luisa Maria Jacinta C. Jocson, Reporter