The banking system’s trust and investment management business amounted to P4.065 trillion as of end-September this year, up by 7.57 percent compared to same period last year of P3.779 trillion, based Bangko Sentral ng Pilipinas (BSP) data.
The big banks or the universal and commercial banks accounted for P4.038 trillion of these trust holdings by their trust departments, while thrift banks managed P26.762 billion.
The industry’s asset structure is largely influenced by the 45 universal and commercial banks which is 60 percent of gross loans, about 25 percent of total financial assets and the rest are cash and due from banks.
Banks’ trusts under management accounted for about 17 percent of the banking system’s total assets. These are considered “highly liquid” assets in the form of investment in securities and deposit in banks. As of end-September, banks’ total assets reached P23.996 trillion, up by 8.96 percent from same period last year of P22.022 trillion.
A trust is an arrangement whereby a person called a trustee is appointed by a person called a trustor to administer, hold and manage funds and/or property of the trust or for the benefit of a beneficiary.
BSP data showed banks’ trust units had net financial assets of P2.403 trillion as of the end of the third quarter, less than a percent lower compared to same period last year of P2.414 trillion.
As for cash and due from banks, this increased by 25 percent to P460 million from P368 million.
The net loans and net deposits stood at P73.607 billion and P1.081 trillion, respectively, as of end-September. The net deposit in banks had zero comparison for 2022.
Last year, banks’ trust departments reported P80.972 billion of net loans, which was higher by 9.09 percent compared to P73.607 billion in 2023.
Under total accountabilities, trusts holdings declined by 7.5 percent to P1.404 trillion versus P1.518 trillion same time last year.
Holdings of unit investment trust funds decreased by 30.41 percent to P494.544 billion from P710.711 billion while pre-need rose 9.56 percent to P92.30 billion from P84.246 billion in 2022.
Personal trust likewise increased by 7.56 percent to P348.891 billion from P324.365 billion.
Also under banks’ total trust accountabilities are agency trusts which amounted to P2.031 trillion, up by 22.94 percent from P1.652 trillion same period in 2022.
The BSP has been continuously reviewing its monetary tools to improve monetary policy transmission and the the development of the money market through better price discovery.
Recently, the central bank expanded the access of UITFs to the BSP securities’ primary market.
Effective Nov. 30 this year, trust entities are allowed access to the primary market for the BSP bills which means they can now participate in the auction through UITFs.
According to the BSP, expanding the eligible participants in the primary market of BSP Securities enhances the BSP’s capability to manage liquidity in the system in order to guide short-term interest rates toward the policy rate.