Banks’ trust assets up 17.62% in 2020

Published March 15, 2021, 7:00 AM

by Lee C. Chipongian

The banking system’s trust and investment management business grew by 17.62 percent in 2020 to P3.43 trillion versus P2.92 trillion in 2019, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The big banks or the universal and commercial banks accounted for P3.4 trillion of these trust holdings while thrift banks manage P31.63 billion.

BSP data showed that for the whole of the industry, with the pandemic last year, cash and due from banks dropped by 9.28 percent to P342 million from P377 million while deposit in banks rose 3.71 percent to P885.36 billion from P853.66 billion.

Bank’s net financial assets, in the meantime, increased by 26 percent to P2.16 trillion last year from P1.72 trillion in 2019. Net loans however fell to P57.65 billion or 7.89 percent from P62.59 billion.

Under total accountabilities, trust holdings was up by 40.35 percent to P1.66 trillion from P1.18 trillion previously. Unit investment trust funds and pre-need trusts both increased by 48.55 percent and 4.8 percent last year to P839.27 billion and P83.56 billion, respectively.

The industry’s asset structure is largely influenced by the 46 big banks, which account for almost 60 percent of gross loans and about 24-25 percent of total financial assets. The rest are cash and due from banks.

The banking system’s total assets grew by 6.1 percent year-on-year in 2020 to P19.4 trillion. Asset expansion was mainly driven by loans and investments while funding was sourced from deposits, bonds and capital, said the BSP.

The big banks account for the biggest share of the total assets of the banking system at 92.8 percent or P18 trillion, followed by thrift banks at 5.8 percent or P1.1 trillion, and rural and cooperative banks at 1.4 percent or P300 billion.

Despite the COVID-19 pandemic, most banks held on to their profitability but still, net profit declined by 32.8 percent year-on-year to P155 billion.

Banks’ net profit fell because they had to increase their provision for credit losses on loans and other financial assets which reached P210.9 billion in 2020. However, the BSP noted that the overall profitability was driven by the 10.4 percent increase in net interest income to P668.2 billion from lending activities.

The pandemic did not affect banks’ sourcing of funding which is primarily from deposits at 76.6 percent or P14.9 trillion, capital at 12.5 percent or P2.4 trillion and bonds payable at 3.7 percent P700 billion, according to the BSP.

At the end of the first global health crisis year, banks’ total deposit liabilities went up by 8.9 percent year-on-year to P14.9 trillion, with the large lenders accounting for 92.8 percent or P13.8 trillion. In terms of deposits, this grew by 9.8 percent in 2020.