PHL financial system’s resources expand by 10.69% as of end-May

The total resources of the Philippine financial system expanded by 10.69% as of May, mainly driven by big banks, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Based on central bank data, the resources of banks and non-bank financial institutions stood at PHP 31.787 trillion as of May from PHP 28.716 trillion in the same month last year.

These resources include funds and assets such as deposits, capital, as well as bonds or debt securities.

Broken down, banks’ resources rose by 12.3% to PHP 26.463 trillion at end-May from PHP 23.565 trillion in the comparable year-ago period, BSP data showed.

Total resources held by universal and commercial banks increased by 12.32% year on year to PHP 24.799 trillion from PHP 22.078 trillion.

Meanwhile, resources of thrift banks reached PHP 1.102 trillion as of May, 9.76% higher than the PHP 1.004 trillion recorded in the same period a year prior.

Resources held by digital banks stood at PHP 105 billion in the period, surging by 32.91% from PHP 79 billion the previous year.

Lastly, rural and cooperative banks’ resources stood at PHP 458 billion as of end-May, increasing by 13.33% year on year from PHP 404 billion.

On the other hand, nonbanks’ resources also grew by 3.34% year on year to PHP 5.323 trillion as of May from PHP 5.151 trillion.

Nonbanks include investment houses, finance companies, security dealers, pawnshops, and lending companies.

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System, and the Government Service Insurance System are also considered nonbank financial institutions.

The expansion of the financial system’s resources as of May reflected the banking industry’s growth in terms of income, loans, and deposits, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippine banking system’s net income grew by 2.95% year on year to PHP 92.11 billion in the first quarter of this year, the latest data from the BSP showed.

​​Meanwhile, banks’ net loan portfolio increased by 10.39% year on year to PHP 13.419 trillion as of the end of May, separate central bank data showed. Total deposits likewise rose by 9.03% to PHP 19.11 trillion.

“Rate cuts from the US Federal Reserve and the BSP in the coming months would lead to more trading income by banks and faster growth in the demand for credit moving forward,” Mr. Ricafort added.

BSP Governor Eli M. Remolona, Jr. last month said the Monetary Board may deliver its first rate cut in over three years at its Aug. 15 review as they expect inflation to continue easing this semester.

He said the central bank may slash borrowing costs by 25 basis points in the third quarter and by another 25 basis points (bps) in the fourth quarter.

The BSP last month kept its policy rate at a 17-year high of 6.5% for a sixth straight meeting. — A.M.C. Sy