Lenders’ profits up 37.5% in 2022

THE PHILIPPINE banking industry saw its net profits jump by 37.5% in 2022, thanks to higher interest income and trading gains, according to central bank data.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed banks’ cumulative net income rose by a third to PHP 309.003 billion last year from PHP 224.752 billion in 2021.   

Earnings growth was driven by a 12.8% year-on-year increase in net interest income to PHP 746.461 billion.

Non-interest income grew by 24.1% to PHP 257.555 billion from PHP 207.587 billion in 2021.

Earnings from fees and commissions went up by an annual 13.6% to PHP 121.851 billion, while trading income surged by 70.4% to PHP 16.48 billion.

Meanwhile, lenders’ non-interest expenses edged higher by 8.2% year on year to PHP 554.222 billion.

Non-interest expenses of banks include compensation and fringe benefits, taxes and licenses, fees and commissions, and administrative expenses.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the improved profitability of banks was due to the further reopening of the economy. This led to greater demand for loans, higher revenues and better asset quality for the banking industry, he added.

“Higher interest rate income may be partly due to higher US/global/local interest rates in the quest by US/global central banks to bring down elevated US/global/local inflation, as triggered by the Russia-Ukraine war since Feb. 24, 2022,” Mr. Ricafort added. 

Data showed the total operating income of Philippine banks grew by 15.5% to PHP 1.004 trillion in 2022, from PHP 869.425 billion in the prior year.

This as interest earnings rose by 16% to PHP 901.841 billion, while expenses increased by 34.6% to PHP 154.897 billion.

The industry’s losses on financial assets dropped by 10% to PHP 87.873 billion as of end-December 2022 from PHP 97.715 billion a year earlier.

Provisions for credit losses slipped by 1.8% to PHP 104.445 billion, while bad debts written off plunged 68.7% to P2.36 billion last year.

The Philippine banking industry ended 2022 with its nonperforming loan (NPL) ratio falling to 3.17% from 3.97% at the end of 2021. This bad loan ratio was the lowest in 28 months.

Bad loans declined by 11.7% to PHP 399.538 billion as of end-December from PHP 452.453 billion a year earlier.

The loan portfolio of Philippine banks expanded by 10.7% to PHP 12.61 trillion as of end-2022 from PHP 11.39 trillion at the end-2021.

Meanwhile, deposit liabilities stood at PHP 17.77 trillion as of end-December, rising by 9.4% year on year.

The local banking industry’s assets climbed by 10.6% to PHP 23.034 trillion as of end-December from PHP 20.83 trillion a year earlier. — Keisha B. Ta-asan