Philippine banks earned combined net profits of ₱391.284 billion in 2024, up by 9.76 percent from ₱356.487 billion in 2023, driven by the financial system’s sustained growth in loans and deposits, along with strong capital and liquidity positions.

Based on Bangko Sentral ng Pilipinas (BSP) data, the cumulative net interest income, which is the difference between interest income and the sum of provision for losses, increased by 13.45 percent to ₱1.038 trillion from ₱915.553 billion of the previous year.

Non-interest income also went up by 5.12 percent last year to ₱233.672 billion from ₱645.148 billion in 2023. Non-interest income is fee-based income, as well as gains on financial assets and liabilities, and foreign exchange profits, among others.

Banks’ operating income likewise increased by 11.87 percent to ₱1.272 trillion compared to ₱1.137 trillion previously.

The banking system’s non-interest expenses reached ₱712.07 billion last year, up 10.37 percent from ₱645.148 billion in 2023. These are compensation and fringe benefits, taxes and licenses, fees and commissions, and impairment losses and provisions.

With the relatively strong performance of the banking sector in 2024, banks continued to provide provisions for potential losses amid a soured loans profile that has not yet returned to pre-pandemic levels.

The industry’s combined losses on financial assets amounted to ₱105.75 billion last year, 25.5 percent higher than the 2023 losses of ₱84.233 billion.

Provision for credit losses also went up by 29.4 percent to ₱118.874 billion from ₱91.866 billion in 2023.

As for bad debts written off, the BSP reported an increase of 109 percent to ₱3.339 billion versus the previous year’s P1.596 billion. Writing off bad debts, which are non-performing loans, enables banks to clear their balance sheets as these are considered uncollectable debts.

The banking sector’s recoveries on charged off assets also increased by 78.4 percent to ₱16.464 billion from ₱9.229 billion. These are banks’ collection of accounts or recovery from impairment of charged-off financial assets and financial assets provided with allowance for credit losses.

The BSP in a report said the domestic banking system has sustained its growth momentum, thus providing “strong stimulus to the economy and reinforcing trust and confidence in the financial system.”

The central bank noted that the easing market conditions, such as the moderation in inflationary pressures, should provide relief and improve bank borrowers’ repayment capacity.

Under BSP supervision, the banking sector continues to be supported by risk governance and precautionary measures such as the provisioning for potential loan losses.