Financial system resources nearing P34 trillion


Domestic financial resources held by both banks and non-banking financial institutions (NBFIs) are on track to reach P34 trillion by the end of the year with adequate assets, deposits and earnings.

In addition, Philippine banks remain well capitalized and highly liquid, with a capital adequacy ratio and key liquidity ratios exceeding the central bank’s regulatory and international standards.

The country’s total financial system resources currently total P32.142 trillion as of end-August this year, 9.16 percent higher than same period in 2023 of P29.433 trillion, based on data from the Bangko Sentral ng Pilipinas (BSP).

The banking sector with P26.809 trillion accounted for 83.5 percent of total financial resources, up by 10.62 percent from end-August last year of P24.236 trillion.

This much control – mostly by the 44 universal and commercial banks -- of Philippine funds and assets as cash or money, dept papers and other financial instruments is why the industry move markets. These big banks have total resources of P25.087 trillion as of end-August, up 9.73 percent from same time last year of P22.685 trillion.

Besides banks, the NBFIs also hold some of these financial resources which are funds and assets in the form of not just deposits, but also capital and bonds or debt securities.

Meanwhile, the country’s 41 thrift banks as of end-August accounted for P1.133 trillion which was 7.9 percent higher compared to last year’s P1.050 trillion. The six digital banks have P110.3 billion of total resources from P85 billion same period last year or up 29.76 percent

The 386 rural banks and 22 cooperative banks, on the other hand, contributed P478.9 billion to total resources, up by 15.25 percent from P415.5 billion same time in 2023.

NBFIs or non-banks accounted for P5.333 trillion of total resources during the period versus P5.196 trillion in 2023. 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.

Presently, the BSP is supervising 1,526 NBFIs without quasi-banking function. These are 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.  

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.

Domestic 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”.

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, according to the BSOS.