The country’s financial system resources totaled P29.855 trillion as of end-September, up by eight percent from same period last year of P27.647 trillion, based on Bangko Sentral ng Pilipinas (BSP) data.

Total resources held by both banks and non-banking financial institutions (NBFIs) are about to breach the P30-trillion mark for the first time despite slower growth in outstanding bank loans due to higher borrowing rates.

These resources are funds and assets in the form of deposits, capital, and bonds or debt securities.

By banking group, the big banks or the universal and commercial banks accounted for bulk or about 94 percent of total resources.

As of end-September, banks accounted for P24.075 trillion of total resources, up by 8.72 percent from same period last year of P22.722 trillion.

The country’s 45 big banks have the largest share of the funds and assets at P23.228 trillion which was 8.76 percent higher compared to P21.356 trillion in 2022.

Meanwhile, the 42 thrift banks supervised by the BSP accounted for P1.068 trillion of the total, 9.54 percent higher than same time last year of P975 billion.

The 368 rural banks and 22 cooperative banks held P408 billion of total resources based on an end-March data, up 4.6 percent from P390 billion in 2022.

Similar with rural and cooperative banks, the BSP also takes its time in reporting NBFIs’ resources. As of end-March, NBFIs accounted for P5.151 trillion of total resources, up 4.56 percent versus P4.926 trillion in 2022.

NBFIs are investment houses, finance companies, investment companies, securities dealers/brokers, pawnshops and lending investors. Non Stocks Savings and Loan Associations (NSSLAs), credit card companies under BSP supervision, private insurance firms, Social Security System and the Government Service Insurance System are also classified as NBFIs.

As of end-October, data from the BSP showed there are 1,323 NBFIs without quasi-banking function. These are investment firms, NSSLAs and pawnshops. 

Only five NBFIs have quasi-banking function which means they can borrow funds from 20 or more lenders. These include investment houses with trusts business, financing companies, among others.

Based on the BSP Report on the Philippine Financial System for the First Semester of 2023, the banking sector also continued to grow in terms of deposits. These bank deposits funded the key activities of banks such as lending and investing.

As of end-June, the total deposits increased 8.1 percent year-on-year to P17.8 trillion. About 84.6 percent or P15.1 trillion of the total deposits were denominated in peso, while 99.1 percent or P17.7 trillion were sourced from resident depositors.

However, amid high borrowing rates and elevated inflation, big banks’ lending growth has slowed to a 21-month low of 6.5 percent year-on-year in September from 7.2 percent in August. Bank lending growth has been declining since April this year.

The BSP said the Philippine financial system remained resilient and supportive of the country’s financing needs despite high inflation and tightened monetary policy.

The BSP target repurchase reverse or target RRP rate is currently at 6.5 percent and it has an upside tightening bias since the BSP's forward guidance indicate it will remain hawkish for longer for as long as inflation is above-target.

As of end-October, the country's consumer price index stood at 6.4 percent average, way above the government target of two percent to four percent. The BSP forecasts that inflation will remain above four percent in the first six months of 2024.

The banking sector is the core of the financial system and it continues to be resilient and stable with a strong balance sheet, profitable operations, sufficient capital and liquidity buffers, and ample provision for probable losses, said the BSP.

It added that with adequate resources, deposits and earnings, Philippine banks remain well capitalized and highly liquid, with a capital adequacy ratio and key liquidity ratios exceeding the BSP regulatory and international standards.