Despite slower economic growth in the second quarter, resources of the country’s financial system expanded to P29.004 trillion as of end-June, about 7.74 percent higher than same period last year of P26.921 trillion, based on Bangko Sentral ng Pilipinas (BSP) data.

Banks and non-banking financial institutions (NBFIs) hold these financial resources - which are funds and assets - as deposits, capital, and bonds or debt securities.

Philippine banks accounted for 83 percent of total financial system resources at P23.971 trillion, of which the universal and commercial banks contributed 94 percent of the total.

Banks include the 45 big banks, 43 thrift banks, and the 395 rural and cooperative banks.

Banking resources as of end-June is 8.9 percent higher than same period last year of P22.016 trillion.

Of the P23.971 trillion industry resources, the big banks accounted for P22.546 trillion which was 9.2 percent higher than same time last year of P20.652 trillion.

Thrift banks have P1.016 trillion which was 2.83 percent more compared to end-June 2022 of P988 billion. The rural and cooperative banks have delayed data and as of end-March, have total resources of P408 billion, up 8.8 percent year-on-year or from P375 billion.

Meanwhile, NBFIs accounted for P5.033 trillion of total resources but similar with the smaller banks, the tally is delayed and the latest is as of end-March. This was 2.58 percent higher compared to same period last year of P4.906 trillion.

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.

There are 1,328 NBFIs without quasi-banking function such as 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.

The BSP continues to assess that domestic banks have maintained a sustained growth momentum in assets, deposits, and profit, as well as having adequate capital and liquidity buffers.

The banks’ asset growth, funded mainly by deposits, and improved credit are all supportive of economic growth. However the country’s GDP growth only reached 4.3 percent in the second quarter, lower than the first quarter’s 6.4 percent and 7.5 percent same period in 2022.

The BSP’s tightening or hawkish monetary policy – mirroring the US Federal Reserve’s actions – have slowed economic growth. In fact BSP Governor Eli M. Remolona said he expects the GDP full-year will reach six percent but not seven percent for 2023. The government target is six percent to seven percent GDP growth for this year.

Meanwhile, the BSP said banks’ risk-taking activities are backed by adequate capital such as common equity and retained earnings. While growth is slowing, banks’ profitability is not but it is setting aside more provisioning and capital.

As of end-December 2022, the big banks’ capital adequacy ratio or CAR on a solo basis slipped to 15.4 percent from 15.6 percent end-September 2022. On a consolidated basis, the CAR also dropped to 16.1 percent from 16.2 percent previously. The CAR remains well above BSP regulatory standards of 10 percent and Bank for International Settlements’ eight percent threshold.

In 2022, the financial system’s total resources amounted to P28.806 trillion, up by 9.3 percent.