The banking system’s trust assets slightly increased by 1.2 percent to P4.112 trillion as of end-June compared to same period last year of P4.063 trillion, based on Bangko Sentral ng Pilipinas (BSP) data.

Trust assets are mostly in the form of investments in securities issued by the government and private companies. Basically, a trust is an arrangement whereby a person called a trustee is appointed by a person called a trustor to administer, hold and manage funds and/or property of the trust or for the benefit of a beneficiary.

The industry’s asset structure is largely influenced by the 44 big banks which is almost 60 percent of gross loans, about 25 percent of total financial assets and the rest are cash and due from banks.

At the end of the second quarter, big banks or the universal and commercial banks accounted for bulk of trust holdings at P4.083 trillion while thrift banks have P28.761 billion of the total.

Of the big banks, the universal banks manage P3.437 trillion while commercial banks have P646.615 billion. The difference between the category of a universal bank versus a commercial bank is how the General Banking Law defines them. A commercial bank has an additional function of an investment house while a universal bank has more authority in that it is allowed to invest in non-allied undertakings and can own up to 100 percent its own thrift and rural bank.

As of end-June this year, banks’ trust entities have cash and due from banks of P423 billion, down by 9.8 percent from same period last year of P469 billion.

Deposit in banks also declined by 7.75 percent to P987.654 billion from P1.070 trillion last year.

Meanwhile, the net financial assets went up by 0.49 percent to P2.417 trillion versus P2.405 trillion while net loans registered a decline of 38 percent to P47.417 billion from P76.686 billion. Other assets increased by 29.31 percent to P659.357 billion during the period.

Under total accountabilities, banks’ trust assets dropped 2.73 percent to P1.389 trillion from P1.428 trillion same time in 2023.

Unit investment trust funds (UITF) held by banks continued to decline by 1.56 percent to P487.517 billion from P495.238 billion last year. The UITF portfolio, being marked-to-market, is impacted by changes in interest rates and foreign exchange rates.

BSP data showed employee benefits also declined by 6.6 percent to P331.757 billion from P355.026 billion while preneed trusts dropped 3.4 percent to P88.65 billion from P91.80 billion.

As for agency trusts under total accountabilities, this totaled P1.936 trillion, down by 4.30 percent compared to last year’s P2.023 trillion. The special purpose trust amounted to P60.372 billion, a significant growth from last year’s P1.329 billion.

The BSP in a report said the trust industry continued to grow in operations, with the assets of agency accounts steadily expanding through the years.

Trust entities have also been improving their products and services to remain competitive while the BSP has been regularly updating rules on trust accounts such as UITF.

The BSP in particular has been improving access and rules governing Personal Equity and Retirement Account (PERA). There have been notable improvements in the number of contributors and total contributions as more Filipinos are setting aside additional savings and investing in their retirement.

Total contributions to the PERA which is the government’s voluntary retirement savings program, amounted to P396.309 million in 2023, up by 20.25 percent from P329.548 million in 2022.