Trust assets of nonbanks rise to PHP 1.49T in 2022

TRUST ASSETS held by the nonbank sector increased by 10.37% to PHP 1.49 trillion in 2022, data from the Bangko Sentral ng Pilipinas (BSP) showed. 

This is higher than the PHP 1.35 trillion in 2021 and 4.92% above the PHP 1.42 trillion in the previous quarter.

The increase was likely because of the improved financial literacy of the investing public, as well as the continued growth in capital markets, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“[The increase] may be attributed to the need for more investment-related products that offer variable returns (higher risks, higher returns) that are booked under Trust, as alternative to and a way to diversify from traditional deposits that offer fixed interest rate income,” Mr. Ricafort said.

A trust business refers to any activity from a trustor-trustee relationship wherein a trustee is appointed by a trustor to administer, hold, and manage their funds and/or properties to the benefit of the trustor.

Banks or nonbank institutions such as investment houses can be designated to have a business unit to perform trust functions.

Mr. Ricafort said tapping the services of professional fund managers in trust units with proven track records in investment returns is more convenient for investors.

“Depending on the risk profile, investment-related products with variable returns (not guaranteed, either higher returns or even risk of losses, depending on market conditions) serviced by Trust units, while traditional deposits that have fixed interest rates are serviced by banks,” he said.

Central bank data showed nonbanks with trust authority from the BSP recorded PHP 1.22 trillion in net financial assets last year, up by 9.9% from the PHP 1.11 trillion in 2021.

Total net loans also grew by 35.9% to PHP 51.09 billion in 2022 from PHP 37.59 billion in 2021.

Nonbanking trusts’ deposits in banks went up by 8.18% to P199.29 billion as of end-December 2022, from the PHP 184.22 billion in the comparable year-ago period.

Meanwhile, nonbanks’ trust liabilities decreased by 9.3% to PHP 573.42 billion last year, from the PHP 632.44 billion in 2021.

Unit investment trust funds also declined by 14.8% to PHP 329.83 billion from PHP 387.21 billion.

There are currently five nonbank financial institutions with quasi-banking functions, such as investment houses with trust functions, that are being monitored by the BSP.

About 1,334 nonbanks without quasi-banking functions are being supervised by the central bank, two of which are investment houses with trust functions. — By Keisha B. Ta-asan