The banking industry posted combined net profits of P290.055 billion for the first nine months of 2024, higher by 6.41 percent from same period last year of P272.557 billion amid sustained growth in loans, deposits, assets and other resources.
Bangko Sentral ng Pilipinas (BSP) data released on Tuesday, Nov. 12, showed that as of end-September this year, banks’ cumulative net interest income grew 14 percent to P767.039 billion versus P672.526 billion same time in 2023. This income is the difference between interest income and the sum of provision for losses on accrued interest income from financial assets and interest expense.
Banks’ non-interest income also rose by 2.32 percent to P171.942 billion from P168.048 billion last year. Non-interest income are fee-based income, as well as gains on financial assets and liabilities, and foreign exchange profits, among others.
The banking system’s operating income during the period likewise increased by 11.7 percent to P938.982 billion compared to same period last year of P840.575 billion.
As of end-September, banks’ non-interest expenses totaled P521.538 billion which was 10.76 percent more than 2023’s P470.847 billion. These are compensation and fringe benefits, taxes and licenses, fees and commissions, and impairment losses and provisions.
Meanwhile, the banking sector’s combined losses on financial assets amounted to P76.199 billion during the period, 349 percent higher than last year’s losses of P16.941 billion.
Provision for credit losses also went up by 341 percent to P85.736 billion from P19.412 billion in 2023.
BSP data showed bad debts written off reaching P2.292 billion as of end-September which was higher than the previous year’s P139.311 million. Writing off bad debts which are non-performing loans enable banks to clear their balance sheets as these are considered uncollectable debts.
Recoveries on charged off assets also increased 353 percent to P11.828 billion versus P2.61 billion same time in 2023. These are banks’ collection of accounts or recovery from impairment of charged-off financial assets and financial assets provided with allowance for credit losses.
According to the central bank’s first half report on the state of the financial system, the banking sector has maintained its strong assets' base, loans, deposits, capital and liquidity positions.
The banking sector accounted for 83.4 percent of the financial system’s total resources and this has allowed banks to support the growth of the domestic economy.
To ensure banks remain strong, the BSP said it will “continue to pursue prudential policy reforms aimed at promoting institutional stability, digitalization, and inclusive sustainable finance.”
In the first half of 2024, the BSP issued policies in line with its strategic agenda. It noted that the stability of the banking system remains rooted on strong corporate governance and sound risk management.
As of end-October this year, the BSP is regulating and supervising 44 big banks or universal and commercial banks; 41 thrift banks; 386 rural and cooperative banks; six digital banks; five non-bank financial institutions with quasi banking function; and 1,540 non-banks without quasi banking function.