Banks’ profits down in first half 22.45%

Domestic banks reported lower net profits in the first six months of the year, down by 22.45 percent year-on-year to P86.048 billion from P110.966 billion due to the COVID-19 pandemic which stunted economic and business activity since mid-March.

Based on the latest Bangko Sentral ng Pilipinas (BSP) data, The big banks’ net profits decreased by 22.24 percent year-on-year to P78.237 billion from P100.615 billion. These are the universal and commercial banks which accounted for more than 95 percent of industry assets.

The whole banking system’s cumulative net interest income as of end-June went up by 15.46 percent to P331.613 billion from P287.213 billion in 2019. Non-interest income also increased by 3.11 percent to P118.059 billion from P90.031 billion.

The combined non-interest expenses of big banks, thrift and rural banks were slightly higher in the first six months at P240.939 billion or 3.73 percent from P232.268 billion same period last year.

The big banks net interest income increased by 20.13 percent to P293.738 billion versus P244.510 billion same time in 2019. Non-interest income also rose by 39.19 percent to P111.183 billion from P79.879 billion.

While on lockdown, commercial banks’ non-interest expenses increased by 8.59 percent to P211.211 billion from P194.491 billion, based on BSP data.

Thrift banks’ net profits also fell by 15.82 percent year-on-year as of end-June to P6.459 billion from P7.673 billion. Its net interest income slightly improved by 2.27 percent to P31.524 billion from P30.825 billion while non-interest income decreased by 20.57 percent to P5.234 billion from P6.590 billion.

Thrift banks’ combined non-interest expenses in the first six months were lower by 9.25 percent to P23.763 billion compared to same time in 2019 of P26.187 billion.

The BSP is currently conducting a comprehensive, baseline survey of all of its supervised financial institutions to determine how the lockdown and containment measures affected their businesses.

BSP Governor Benjamin E. Diokno said the survey will assess the financial and operational impact of the COVID-19 pandemic on banks and other monitored financial institutions.

Diokno said the review will cover crucial data such as banks’ profitability, asset quality, liquidity position and capital position amid the coronavirus public health crisis. The survey will also monitor and assess banks’ digital transformation which was accelerated due to pandemic.

Much of Luzon, especially the National Capital Region, has been on lockdown since March 17. The stalled economy has led to an economic recession however Diokno said the economy is not weak and because it is fundamentally strong, the GDP contraction is only temporary.