The 48 thrift banks supervised by the central bank continue to be stable amid the COVID-19 pandemic despite decreased deposits and portfolio, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.
“During the first semester of 2020, we noted a decline in thrift banks’ assets, loans and deposits. This is due to the economic slowdown and the consolidation of two subsidiary thrift banks’ with parent banks,” said Diokno during his virtual “GBED Talks”.
In July 2019 and in March this year, RCBC Savings Bank and PNB Savings Bank merged with their respective parent banks, Rizal Commercial Banking Corp. and Philippine National Bank.
According to Diokno, the latest thrift banking data show healthy capital adequacy ratio (CAR) and liquidity buffers, as well as “profitability and satisfactory asset quality.”
He said the industry amid the public health crisis “remains stable and continues to support the financing needs of the economy.”
“In fact, thrift banks’ total loan portfolio reached P789 billion at end-June 2020. Loans were diversified across economic sectors with the household sector and individuals having the largest share of lending. Lending activities were mostly funded by deposits which stood at P857.5 billion at end-June this year,” said Diokno.
In the same period, the sector’s bad loans ratio is better at 5.7 percent and loan loss provisioning was up resulting in a higher non-performing loan coverage ratio of 60.4 percent versus 48.1 percent at the end of 2019.
Also as of end-June, thrift banks’ cumulative net profit was at P6.5 billion although lower than P7.7 billion same time in 2019.
“Thrift banks remained well-capitalized,” said Diokno. The CAR of subsidiary thrift banks was at 16.1 percent as of end-March this year while stand-alone thrift banks have 18.7 percent – both above the requirement of 10 percent.
“The industry maintained sufficient buffers to meet liquidity and funding requirements,” said Diokno. Stand-alone banks surpassed the 20 percent minimum liquidity ratio at 32.6 percent at the end of 2019.
While satisfied of thrift banks’ stable condition, the BSP chief said they remain vigilant. “The BSP continues to monitor developments and stands ready to deploy its full range of prudential policy toolkit and monetary instruments to safeguard the stability of the financial system,” he said.
As of end-August, the 48 thrift banks operate a branch network of 2,613.