Banks’ net profits reach P309 B

Banks’ net profits reach P309 B


The banking sector’s combined net income increased by 37.5 percent in 2022 to P309 billion from P224.75 billion in 2021 boosted by expanding credit activity leading to growth in assets, deposits and profits.

Local banks also maintained stable capital and liquidity buffers as well as adequate provision for credit losses last year despite elevated inflation and the volatile exchange rate while interest rates are rising.

Based on Bangko Sentral ng Pilipinas’ (BSP) preliminary data, there was improvement in net profit because of the higher interest income from lending and investing activities, as well as from trading and other income.

Bank teller counting P1,000 bills/Bloomberg photo

The industry’s combined net interest income increased 12.8 percent to P746.46 billion in 2022 from P661.84 billion in 2021. Non-interest income also went up by 24 percent to P257.55 billion from P207.58 billion while non-interest expenses rose eight percent to P554.22 billion.

The total operating income in 2022, meanwhile, hit the P1-trillion mark for the first time. up by 15.5 percent from 2021’s P869.42 billion.

Banks’ provision for credit losses dipped 1.8 percent to P104.44 billion last year, compared to P106.39 billion in 2021.

In 2022, the non-performing loans (NPLs) declined due to a more aggressive debt collection efforts but accompanied by relief measures to encourage loan restructuring. The BSP said this also led to an easing payment strain on the part of borrowers, in an upgrade in their loan classification status, and write-offs.

Banks’ bad debts written off totalled P2.35 billion last year, down by 68.8 percent from P7.54 billion in 2021. Writing off bad debts which are NPLs enable banks to clear their balance sheets as these are considered uncollectable debts.

Under losses or recoveries of financial assets, banks’ recovery on charged-off assets also increased by 16.7 percent to P18.93 billion from P16.22 billion.

As of end-2022, the BSP is supervising 45 universal and commercial banks or the big banks. There are also 43 thrift banks, 403 rural banks and cooperative banks, and six digital banks.