The financial system’s total resources rose by 6.4 percent to P25.92 trillion in 2021 versus P24.36 trillion in 2020, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The banking sector is the core of the financial system as credit source for economic activities, and its resources come from deposits, bond issuances and capital infusion. The data on total resources exclude the BSP’s managed-finances and resources but includes the allowance set aside by banks for probable losses.
Banks’ preliminary data on its total resources accounted for 83 percent or P21.41 trillion of the total P25.92 trillion in 2021. The rest are non-bank financial institutions.
Based on BSP numbers, banks’ total resources increased by 6.88 percent year-on-year from 2020’s P20.03 trillion.
As there is a lag time for non-banks’ total resources data, the latest BSP data only showed end-September 2021 numbers which amounted to P4.5 trillion. This was up by 3.92 percent from P4.33 trillion same period in 2020. Non-banks are investment houses, finance companies, investment companies, securities dealers/brokers, pawnshops and lending investors. Non Stocks Savings and Loan Associations, credit card companies under the BSP supervision, private insurance firms, Social Security System and the Government Service Insurance System are also classified as non-bank financial institutions.
Big banks accounted for P19.74 trillion of the total P21.41 trillion resources of the banking system in 2021, while thrift banks have P1.33 trillion.
Both big banks and thrift banks’ total resources were higher compared to 2020’s P18.53 trillion and P1.19 trillion, respectively.
The smaller banks or the rural banks have P334 billion resources as of end-September 2021, also higher than 2020’sP308 billion,based on BSP data.
BSP Governor Benjamin E. Diokno is still confident that banks are resilient enough to withstand tighter global financial conditions this year as interest rates begin to normalize.
In 2021, the industry maintained its positive growth in terms of assets, loans, deposits, net income, money and capital market exposures.
Based on central bank stress tests, local banks’ level of capital and liquidity buffers will enable the industry to cushion the impact of an asynchronous global recovery.
The BSP said most banks are capable of absorbing losses under scenarios of assumed credit impairment since credit risks are sufficiently funded.
Big banks’ capital adequacy ratio (CAR) as of end-September 2021 remain sufficient and stable at 17.4 percent on consolidated basis, although lower compared to 17.6 percent in the second quarter ending in June.
CAR which is a bank’s measure of capital health in relation to its risks and liabilities, is well-above the 10 percent minimum threshold set by the BSP and eight percent minimum by the Bank for International Settlements.