The banking sector reported cumulative net profits of P122.67 billion as of end-June, it grew by 42.88 percent year-on-year from P85.85 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

The recovering economy has pushed banks’ income to post modest growths despite the pandemic and the slow reopening of businesses.

Banks’ total operating income in the second quarter was down 1.17 percent to P451.746 billion from P457.085 billion, while its net interest income also contracted by 3.44 percent to P325.582 billion from P337.176 billion same time in 2020.

Both non-interest income and non-interest expenses increased during the period, to P126.164 billion and P253.817 billion, respectively, up by 5.22 percent and 3.16 percent, from same time last year of P119.908 billion and P246.034 billion.

The 46 big banks or the universal and commercial banks reported combined P113.492 billion net profit in the second quarter, up by 44.26 percent compared to same time in 2020 of P78.669 billion.

Thrift banks, in the meantime, posted a decline of 13.42 percent in net profits to P6.642 billion compared to P7.673 billion same period in 2020. There are 48 thrift banks in the country.

Based on the BSP’s latest Banking Sector Outlook Survey (BSOS), released in late July, generally, Philippine banks are still cautiously optimistic about 2021 and 2022 prospects.

They continue to expect double-digit growth in assets, loans, deposits, net income, money and capital market investments for the next two years.

However, since the economic and business environment is still mired in COVID-19 pandemic concerns, banks expect bad loans or non-performing loan ratio (NPL) to exceed five percent, also in the next two years. The surveyed big banks estimate an NPL of as high as 6.5 percent. As of June this year, NPL ratio stood at 4.48 percent.