Banks’ assets rise at end-August

The total assets of the Philippine banking industry continued to rise year on year at end-August amid a sustained growth in loans and deposits.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed banks’ assets grew by 8.6% to PHP 23.46 trillion as of August from PHP 21.59 trillion in the same period a year ago.

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 latest asset growth of banks is largely consistent with the growth in loans,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

However, lending growth has slowed amid higher interest rates, which made borrowing more expensive, he said.

The banking industry’s total loan portfolio inclusive of IBL and RRP increased by 9.5% to PHP 12.51 trillion as of end-August from PHP 11.42 trillion in the comparable year-ago period, BSP data showed.

Net investments, or financial assets and equity investments in subsidiaries, went up by 11% to PHP 6.95 trillion from PHP 6.26 trillion a year ago. 

Cash and due from banks declined by 7.2% to PHP 2.55 trillion in the first eight months of 2023 from PHP 2.75 trillion in the same period in 2022.

Net real and other properties acquired (ROPA) went up by 6.07% to PHP 106.88 billion from PHP 100.76 billion last year.

Other assets stood at PHP 1.35 trillion, 27% higher than the PHP 1.06 trillion last year.

Meanwhile, the banking system’s total liabilities increased by 8.3% to PHP 20.52 trillion as of end-August from PHP 18.93 trillion in the comparable year-ago period.

“Asset growth is also partly supported by the continued increase in banks’ earnings that are added to banks’ capitalization and more funds available for lending and other investments,” Mr. Ricafort said.

“Some banks also got new capital infusion from investors, thereby having more funds for lending and other investments, leading to the continued growth in loans and total assets,” he added.

By banking group, universal and commercial banks held P22 trillion of the industry’s total assets as of end-August, while the thrift banks had PHP HP 987.55 billion.

Total assets of rural and cooperative banks stood at P385 billion as of end-June.

BDO Unibank, Inc. had the largest assets among Philippine banks with PHP 3.98 trillion in the first semester. It was followed by Land Bank of the Philippines with PHP 3.03 trillion, and Bank of the Philippine Islands with PHP 2.66 trillion.

Others in the top 10 banks in terms of asset size were Metropolitan Bank and Trust Co., China Banking Corp., Rizal Commercial Banking Corp., Philippine National Bank, Union Bank of the Philippines, Development Bank of the Philippines, and Security Bank Corp. 

The Monetary Board has kept the target RRP rate at 6.25% after it raised borrowing costs by 425 basis points from May 2022 to March 2023.

BSP Governor Eli M. Remolona, Jr. earlier said the Monetary Board may resume monetary tightening at its next meeting on Nov. 16 if inflation pressures persist. — K.B. Ta-asan