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Manila Bulletin devider Business devider Banking & Finance devider Financial system resources climb to P28.8 T end-July

Financial system resources climb to P28.8 T end-July

Published Sep 25, 2023 07:21 am

At A Glance

  • The total resources of the Philippine financial system went up by 6.65% to P28.796 trillion as of end-July from P27 trillion same time in 2022.
  • The Bangko Sentral ng Pilipinas (BSP) reports that the banking sector with P23.763 trillion accounted for 82% of total financial resources. The rest are non-banks with P5.033 trillion of total resources as of end-March.
  • The BSP says the Philippine banking system continued to improve, particularly in terms of resources and asset quality, despite a weaker gross domestic product (GDP) growth in the second quarter of 4.3% versus 6.4% in the first quarter this year, and 7.5% same period in 2022.

The central bank reported that the total resources of the Philippine financial system amounted to P28.796 trillion as of end-July, up by 6.65 percent compared to P27 trillion same period last year.

The difference is P1.796 trillion, which is the amount banks added to total resources in the first seven months of 2023 mainly through increased deposits.

Based on Bangko Sentral ng Pilipinas (BSP) data, the banking sector with P23.763 trillion accounted for 82 percent of total financial resources. This was higher by 18.25 percent than end-July 2022’s P20.095 trillion.

Besides banks, the non-banking financial institutions (NBFIs) also hold some of these financial resources through funds and assets in the form of deposits, capital and bonds or debt securities.

The total resources of the 45 universal and commercial banks reached P22.338 trillion during the period, up 7.52 percent from P20.775 trillion.

The 43 thrift banks, on the other hand, contributed P1.018 trillion which was higher than last year’s P945 billion.

The rural and cooperative banks have delayed data and the end-July has not been reported yet by the BSP. As of end-March, the smaller banks have total resources of P408 billion, up 8.8 percent year-on-year. There are 395 rural and cooperative banks in the country.

Similar with rural and cooperative banks, the BSP also takes its time in reporting NBFIs’ resources. As of end-March, NBFIs accounted for P5.033 trillion of total resources, up 2.58 percent year-on-year.

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.

Last year, the financial system’s total resources amounted to P28.806 trillion, up by 9.3 percent from 2021’s P26.357 trillion.

The BSP said the Philippine banking system continued to improve, particularly in terms of resources and asset quality, despite a weaker gross domestic product (GDP) growth in the second quarter of 4.3 percent versus 6.4 percent in the first quarter this year, and from 7.5 percent same time in 2022.

The expansion in total resources was financed by deposits which reached P14 trillion as of end-June 2023, up 7.2 percent from the previous year and by 1.3 percent from end-March this year.

These deposits were mostly in time deposits which increased by 42.8 percent year-on-year. “(This was an) indication of consumers locking in funds for higher returns amid the rise in interest rate environment,” said the BSP in a report.

Savings deposits also grew by 1.8 percent while demand deposits dipped by a minimal 0.01 percent. Foreign currency deposits owned by residents also increased during the period by 2.1 percent.

According to a BSP report, the “continued (year-on-year) expansion in deposits reflected the sustained confidence in the Philippine banking system despite periods of uncertainty in the global financial market amid the reported failure of US and European banks early this year.”

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