MANILA, Philippines--The net income of the country’s banking sector grew by at a double-digit rate in the first semester, bouncing back from the decline in the same period a year ago when the global economic turmoil was about to reach its peak.

The combined net income of banks stood at P33.3 billion from January to June, climbing 33 percent from only P25.1 billion in the same period last year, according to a report released yesterday by the Bangko Sentral ng Pilipinas.

Regulators said the latest income performance kept the banking sector on track to exceed the P41.5 billion in profit generated last year and return to its profitability level prior to the global economic crisis.

In 2007, the net income of the banking sector stood at P62.9 billion

“The Philippine financial system has started to see the silver lining behind the dark clouds of the 2008 subprime crisis. Banks’ key balance sheet accounts registered respectable growths despite the challenging operating environment,” the BSP said in the report.

The income of banks was still largely driven by interest-earning activities, which are mainly the extension of loans, according to the central bank.

Some banks had tightened credit standards earlier in the year, cautious not to expose themselves too much to credit risk while income of borrowers were believed to have been restrained by the crisis. Nonetheless, the BSP said, the tightening of credit standards only led to a slowdown in the growth of lending. There was still growth in credit, the regulator stressed.

Gross income from loans and other interest-earning activities amounted to P104.9 billion in the first half, up 24 percent from P84.9 billion in the same period a year ago.

The central bank said banks in the country were less affected by the global crisis than its neighbors because banks in the Philippines were more conservative, placing less money in offshore investments.

BSP Governor Amando Tetangco Jr. earlier said the subprime debacle in the United States, which eventually led to the global economic downturn, need not discourage banks from investing in derivatives and other sophisticated instruments.

However, he said the BSP would continue to implement regulations that require banks to put up sufficient capital cover for any risky activities they will have to make.

Beginning January 2010, banks will be required to submit on an annual basis a risk assessment report detailing all the risks that they face and the amount of capital they deem appropriate to cover those risks.