MANILA, Philippines — The country’s banking industry recorded a double-digit growth in deposits in the first semester as more Filipino households substantially raised their savings amid the coronavirus pandemic, according to the Bangko Sentral ng Pilipinas (BSP).
According to the BSP, bank deposits expanded by 12.4 percent to P11.2 trillion from January to June compared to P10 trillion in the same period last year.
During the first semester, the BSP said savings deposits posted the biggest increase with five percent, followed by demand and time deposits with 0.6 percent each.
Foreign currency deposits owned by residents increased by five percent to P2.1 trillion in the first semester from P2 trillion in the same period last year.
Philippine banks led by BDO Unibank, Metropolitan Bank & Trust Co., Bank of the Philippine Islands have lowered the interest on deposits to 0.125 percent.
This came after the BSP slashed interest rates by a cumulative 175 basis points to an all-time low of 2.25 percent this year as part of aggressive easing measures to counter the impact of the COVID-19 pandemic.
In terms of the number of banks, the BSP said the number of head offices declined to 541 in June from 554 a year ago due to the continued consolidation of banks and the closure of weak players.
On the other hand, the number of branches inched up to 12,912 in the first half from 12,543 in the same period last year.
The banking industry’s total assets went up by 8.5 percent to P19.1 trillion from P17.6 trillion amid the steady rise in deposits.
The Philippine banking system continued to show resilience and stability even as the country’s economic activities and financial transactions were severely limited by the disruption caused by the pandemic and quarantine measures,” the BSP said.
Earnings of Philippine banks slumped by 29 percent to P86.05 billion in the first half from P110.97 billion in the same period last year and the industry’s provision for soured loans breached P100 billion amid the pandemic.
Provisioning made by banks for credit losses on loans and other financial assets amounted to P103.77 billion from January to June, or more than five times the P19.75 billion it allocated in the same period last year due to the health crisis.
“In the second quarter, banks’ balance sheets exhibited sustained annual growth in assets and deposits, although mildly subdued with respect to end-March 2020 levels. At the same time, asset quality remained steady while capital adequacy ratios stayed above international standards,” the central bank said.