PH banks' net profits up 28% end-June
At A Glance
- Philippine banks' combined net profits went up by 27.7% year-on-year to P182.764 billion as of end-June, based on Bangko Sentral ng Pilipinas (BSP) data as of Sept. 22.
- The local banking system is the core of the financial system. Based on a central bank second quarter report, it assured that the banking system remains stable.
- Meanwhile, the big banks accounted for bulk of the financial sector resources with 94.1% of the total. The remaining 5.9% was accounted for by thrift banks and rural banks.
The domestic banking system’s combined net profits rose 27.7 percent to P182.764 billion as of end-June this year compared to P143.122 billion same time in 2022 amid higher loans and investments, based on the latest data.
Bangko Sentral ng Pilipinas (BSP) statistics, which was updated as of Sept. 22, also showed that banks reported a combined net interest income of P437.480 billion in the first six months, up by 23.6 percent from P354.319 billion. Net interest income is the total interest earned or actually collected from various financial assets, less interest expenses and provision for losses.
Meantime, non-interest income totaled P114.598 billion, slightly lower by two percent from same period last year of P115.005 billion. Non-interest income is derived primarily from dividend income, fees and commissions income, trading income, sale of other assets, and other income.
In the first half of 2023, the banking sector’s non-interest expenses or the costs incurred by banks, totaled P309.73 billion which was 16 percent higher than the previous year’s P266.948 billion.
Banks’ losses and recoveries on financial assets as of end-June declined 6.65 percent to P35.093 billion from P37.594 billion same time in 2022.
Meanwhile, provision for credit losses was at P40.022 billion, also lower by 12.33 percent from P45.65 billion.
As for bad debts written off, data showed there was only P262.623 million as of end-June compared to P1.813 billion same time last year. Writing off bad debts which are non-performing loans enable banks to clear their balance sheets as these are considered uncollectable debts.
The local banking system is the core of the financial system. All throughout the pandemic and post-Covid crisis, the industry continued to grow its assets, loans, deposits, and profit.
With BSP’s supervision, it also continued to have ample capital and liquidity buffers, as well as provision for credit losses.
Based on a central bank second quarter report, it assured that the banking system remains stable. As of end-June, banks’ assets and deposits grew while its asset quality generally improved.
Total resources which are bank assets increased by 8.9 percent to P29 trillion and this was mainly driven by deposits which reached P14 trillion as of end-June.
Meanwhile, the big banks continued to make up the bulk of the financial sector with 94.1 percent of the total banking system’s resources. The remaining 5.9 percent was accounted for by thrift banks and rural banks. Of the 5.9 percent, thrift banks contributed 4.2 percent while rural and cooperative banks accounted for 1.7 percent.
Based on the same report, the latest capital adequacy ratios of big banks or the 45 universal and commercial banks rose slightly to 15.7 percent as of end-June on solo basis from 15.4 percent in the second quarter, and 16.4 percent on consolidated basis from 16.1 percent.
BSP Governor Eli M. Remolona Jr. has said that the Philippine economy survived the pandemic due to the strength of the banking system.
"Our banks maintained more than adequate levels of capital and remained flush with liquidity (and) there was no need to repair balance sheets. I have said this before, and I’ll say it again. Unlike in previous crises, this time our banks were part of the solution rather than part of the problem," he said earlier.