Philippine bank assets sustain growth momentum

MANILA, Philippines - Assets of Philippine banks continued to post a double-digit growth in the first nine months amid external challenges arising from the impending rate hike in the US, the negative rates in Japan as well as the economic slowdown in China.

Data released by the Bangko Sentral ng Pilipinas showed total resources of Philippine banks went up 10.4 percent to P13.1 trillion from January to September compared with P11.86 trillion in the same period last year.

The total resources of big banks or universal and commercial banks rose 10.6 percent to P11.8 trillion from P10.67 billion, while that of mid-sized banks or thrift banks increased by 9.4 percent to P1.07 trillion from P979.6 billion.

On the other hand, total assets of small banks or rural banks inched up five percent to P223.4 billion in the first nine months from P212.8 billion in the same period last year amid the closure of more weak players in the industry.

Last year, total resources of the Philippine financial system increased 7.4 percent to P12.4 trillion from P11.5 trillion in 2014. As a percent of gross domestic product (GDP), the country’s banking resources stood at 93.4 percent.

The BSP said the Philippine banking system remains resilient as it continued to support long-term economic growth.

The continued rise in resources including deposits, profits, and retained earnings indicate that banks have the ability to service funding needs of corporate and household clients.

At the same time, this shows banks have enough to act as a buffer against any external shocks.

The country’s GDP growth accelerated to 7.1 percent in the third quarter of the year from seven percent in the second quarter amid higher investments and strong rebound in the agriculture sector.

Moody’s Investors Service said the country’s banking sector poses limited contingent risks to the government.

“The Philippine banking system as a whole is well-capitalized, profitable, competently managed and very liquid, thus posing limited contingent risks to the government,” Moody’s said in its annual credit analysis on the Philippines.