As a measure of profitability, the banking system’s return on assets (ROA) and return on equity (ROE) continued to improve in the second quarter compared to the first three months of 2023 and same period last year.

Based on Bangko Sentral ng Pilipinas (BSP) data, as of end-June, ROA increased to 1.57 percent from 1.52 percent end-March and 1.19 percent same time in 2022.

Meanwhile, the industry cost-to-income ratio also rose to 61.48 percent end-June from 54.97 percent in the previous quarter and 58.95 percent end-June 2022. The percentage of non-interest expenses, net of impairment losses, to total operating income is the cost-to-income ratio.

The net interest margin (NIM) likewise increased to 8.29 percent in the second quarter from 3.86 percent end-March and 3.54 percent same time in 2022.

The ROA is the percentage of net profit or loss to average assets. As of end-June banks’ annualized net profit stood at P349.466 billion, up from P245.2 billion same time in 2022. Average assets also increased to P21.32 trillion from P20.58 trillion while total assets stood at P23.27 trillion from P21.35 trillion last year.

ROE, which is the percentage of net profit or loss to average capital, was based on an average capital of P2.71 trillion in the second quarter, higher than same period last year of P2.54 trillion. Total capital in the second quarter was at P2.85 trillion, also up from P2.57 trillion last year.

The NIM, based on BSP industry data, was annualized at P836.75 billion, up from P690.57 billion in 2022. Also related to NIM, banks’ average earnings assets was at P10.09 trillion in the second quarter, down from the same period last year of P19.52 trillion.

The BSP in a report said banks’ continued strong performance can be seen in its sustained expansion in assets, deposits, and profit, as well as stable capital, liquidity buffers and ample provision for credit losses.

As of end-June, banks’ cumulative net profits stood at P178.50 billion, up 24.72 percent from same period in 2022 of P143.12 billion.

The combined industry net interest income rose 16.97 percent to P414.45 billion from P354.32 billion while non-interest income dropped 7.74 percent to P107.94 billion versus P117 billion previously.

In terms of assets, the SM Group’s BDO Unibank Inc. is the country’s biggest bank with total assets of P3.92 trillion as of end-March this year.

Government-owned Land Bank of the Philippines is second largest lender with total assets of P3.11 trillion followed by the Ayala-led Bank of the Philippine Islands with P2.66 trillion.

The Ty-controlled Metropolitan Bank and Trust Co. with total assets of P2.62 trillion as of end-March is fourth biggest bank while China Banking Corp., a sister company of BDO, has P1.36 trillion.

The other banks in the top 10 in terms of asset size are Rizal Commercial Banking Corp., Philippine National Bank, state-owned Development Bank of the Philippines, Union Bank of the Philippines and Security Bank Corp.