Philippine banks’ assets rise to PHP 25.93 trillion at end-July

The Philippine banking industry’s assets jumped by 12.24% year on year as of end-July, Bangko Sentral ng Pilipinas (BSP) data showed.

Lenders’ combined assets increased to P25.93 trillion at end-July from P23.10 trillion a year prior, according to preliminary BSP data posted on its website.

However, this inched down by 0.998% from the P26.19 trillion recorded as of end-June.

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 increase in banks’ total assets could be largely attributed to the faster, double-digit growth in banks loans, continued growth in bank deposits, and earnings growth that also added to banks’ capitalization,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Broken down, the banking sector’s total loan portfolio inclusive of IBL and RRP climbed by 10.95% to PHP 13.73 trillion as of end-July from PHP 12.37 trillion in the previous year.

Net investments, or financial assets and equity investments in subsidiaries, increased by 12.53% to PHP 7.69 trillion from PHP 6.83 trillion a year ago.

Meanwhile, cash and due from banks stood at PHP 2.46 trillion as of end-July, inching down by 0.99% from PHP 2.48 trillion a year earlier.

Net real and other properties acquired increased by 4.04% to PHP 110.11 billion from PHP 105.83 billion a year ago.

Banks’ other assets surged by 48.74% to PHP 1.95 trillion from PHP 1.31 trillion a year earlier.

On the other hand, the total liabilities of the banking system rose by 12.53% to PHP 22.71 trillion at end-July from PHP 20.18 trillion in the comparable year-ago period.

This was mainly driven by the 9.43% increase in deposit liabilities to PHP 19.27 trillion from PHP 17.61 trillion a year prior.

The Philippine banking system’s combined net income stood at PHP 190.26 billion in the first half, rising by 4.1% from PHP 182.76 billion a year prior, latest data from the central bank showed.

Mr. Ricafort said banks could see faster asset growth moving forward as the BSP is expected to cut benchmark interest rates further, which could boost lending, trading gains and other investment income.

The Monetary Board last month cut benchmark interest rates for the first time in almost four years amid an improving inflation and economic outlook, with its governor signaling at least one more reduction before the end of the year.

The Monetary Board on Aug. 15 reduced its policy rate by 25 basis points (bps) to 6.25% from a 17-year high of 6.5%.

BSP Governor Eli M. Remolona, Jr. said they could cut rates by another 25 bps within the year. The Monetary Board’s last two policy-setting meetings this year are on Oct. 17 and Dec. 19. — A.M.C. Sy