The total assets of the Philippine banking system rose 10.77 percent to P25.988 trillion as of end-August this year from P23.46 trillion same period in 2023, supported by deposits, stable earnings, healthy capital and liquidity.
The Bangko Sentral ng Pilipinas (BSP) refers to total assets as banking resources and includes cash and due from banks, total loan portfolio, total investments, real and other properties acquired (ROPA), and other assets held by financial institutions.
Based on the latest BSP data, with the sustainable asset growth, the banking system’s liabilities also increased by 10.79 percent to P22.75 trillion versus P20.516 trillion same time last year. The banking system’s liabilities are its financial obligations such as the sum of its financial liabilities held for trading; financial liabilities designated at fair value through profit or loss; deposit liabilities; due to other banks; bills payable; unsecured subordinated debt; bonds payable; redeemable preferred shares; derivatives with negative fair value held for hedging; finance lease payment payable; and other liabilities.
As of end-August, the industry’s net loans went up by 10.45 percent to P13.816 trillion compared to P12.508 trillion last year. Net loans are inclusive of interbank loans receivable and reverse repurchase.
Banks’ net investments totaled P7.407 trillion during the period which was 6.62 percent higher than the same period in 2023 of P6.947 trillion. Net investments are financial assets and equity investments.
The banking sector’s cash and due from banks or cash on hand and banks’ receivables among others, amounted to P2.648 trillion or up by 3.96 percent from P2.547 trillion in 2023.
The BSP reported that banks’ net ROPA increased by 3.91 percent as of end-August to P111.025 billion from P106.845 billion in 2023. ROPA is described as “other than those used for banking purposes or held for investment”. It is acquired by a bank to settle a loan from a borrower through foreclosure or dation in payment (dacion en pago), among other reasons.
By banking group, the 44 big banks or universal and commercial banks accounted for about 94 percent of total industry assets at P24.378 trillion as of end-August. The big banks reported total liabilities P21.384 trillion.
The 42 thrift banks had assets of P1.065 trillion during the period while its total liabilities amounted to P896.969 billion.
As for the six digital banks, these have total assets of P105.366 billion and liabilities of P91.133 billion.
The rural banking sector with cooperative banks have two months of reporting lag period. As of end-June, the rural and cooperative banks contributed a combined P439.249 billion in total assets while liabilities amounted to P358.455 billion. There are 364 rural banks and 21 cooperative banks as of end-August.
The country’s largest lender in terms of asset size is still SM Group’s BDO Unibank Inc. BDO has been the top Philippine bank since the time of former central bank governor Amando M. Tetangco Jr. who was the governor from 2005 until 2017.
Based on BSP data as of end-June this year, BDO has total assets of P4.508 trillion. Previously, before BDO took the firm lead, the biggest bank was either the Ty family’s Metropolitan Bank and Trust Co. (Metrobank) or the Ayala-led Bank of the Philippine Islands (BPI).
The position of Philippines’ second biggest bank is fluid. The latest tally showed government-controlled Land Bank of the Philippines with total assets of P3.325 trillion is in the No. 2 spot, edging out Metrobank which was the second biggest bank at the end of the first quarter. Metrobank currently has total assets of P3.096 trillion at No. 3.
BPI is the country’s fourth biggest bank in terms of assets with P3.090 trillion while another Sy-owned bank, China Banking Corp., is the fifth biggest lender with P1.678 trillion.
The other banks in the top 10 in terms of asset size are the Yuchengcos’ Rizal Commercial Banking Corp. with P1.382 trillion; Lucio Tan Group’s Philippine National Bank with P1.254 trillion; Security Bank Corp. with P1.189 trillion; Aboitiz-led Union Bank of the Philippines with P975.009 billion; and state-owned Development Bank of the Philippines with P971.535 billion.
According to the recently released 2023 Banking Sector Outlook Survey (BSOS) of the BSP, for the next two years Philippine banks have an optimistic outlook and expect double-digit growth in their assets, loans, deposits, and net income.
The survey whose respondents are bank presidents and chief executive officers, noted that banks anticipate improvement in the quality of their loan portfolio with majority projecting manageable non-performing loan (NPL) ratio; sustained loan loss provisions to ensure adequate coverage of potential losses in their loan portfolio; while restructured loans are projected to be below two percent of total loans for the next two years.
Based on the BSOS, banks are also planning to focus more on corporate and retail lending; providing financial support to sustainable and green projects including key sectors such as micro, small, and medium enterprises, real estate, and households; and to also invest in digital transformation to enhance their financial products and services.
The BSP further noted that “credit, operational, and macroeconomic risks remain their (banking sector’s) primary concern” and that they are “actively enhancing their risk governance to safeguard interest of their depositors and investors”.
“The industry outlook for the next two years remains upbeat amid macroeconomic challenges experienced in 2023 (while) a stable outlook with double-digit growth in assets, loans, deposits, and net income over the next two years, is expected by majority of surveyed banks,” said the BSP.
To increase assets and resources, the big banks are also planning to actively participate in the capital markets. They expect to grow their holdings of investments in securities and keep growth at double digits, based on the survey.