Mergers made PH banks stronger

The country’s banking industry continued to consolidate last year amid mergers that result in stronger institutions as well as the exit of weak players, contributing to the overall strength of the financial system.

Data from regulators released this week showed there were fewer banks in the country at the end of 2013 than the year before. Bank deposits, assets, and the number of branches remained on the rise.

“[This indicates the] continued consolidation of banks, as well as the exit of weaker players in the banking system,” the Bangko Sentral ng Pilipinas (BSP) said in a report.

According to the quarterly BSP Report on Economic and Financial Developments, the number of banking institutions fell to 673 as of end-December 2013 from the quarter- and year-ago levels of 676 and 696, respectively.

Meanwhile, their branch networks increased to a total of 9,935 at the end of December from 9,720 in September 2013 and 9,410 during at the end of 2012, due mainly to the increase in the branches and agencies of universal, commercial and thrift banks.

Even with the decline in the number of banks, the industry’s resources, which support the growing economy’s demand for loans, rose significantly at the end of last year.

The total resources of the banking system rose by 8.9 percent to P10.3 trillion as of December 2013 from quarter- and year- ago levels of P9.5 trillion and P8.4 trillion, respectively .

“The increase could be traced to the growth in loans, securities and other shares and nonfinancial assets,” the BSP said.

Universal and commercial banks accounted for more than 90 percent of the total resources of the banking system.

Savings and time deposits remained the primary sources of funds for banks. Banks’ total deposits as of December 2013 amounted to P6.1 trillion, 36.2 percent higher year-on-year.

The rapid growth may be attributed to the shift of depositors’ investments from BSP special deposit accounts to bank deposits as a result of the fine-tuning of access of banks and trust entities to the facility.

Savings deposits registered a 32.8 percent growth and continued to account for nearly half of the funding base of banks. Meanwhile, demand deposits expanded by 34.1 percent year-on-year, and time deposits increased by 44.2 percent from the level posted a year ago.