Major Philippine banks’ profits slowed further in the third quarter of the year amid a contraction in non-interest income and higher expenses, data from regulators showed this week.
At the end of September, the country’s universal and commercial banks had a combined net income that was virtually flat year-on-year. Higher expenses offset a healthy increase in interest income, data showed.
Universal and commercial banks’ combined profits reached P87.34 billion at the end of September, higher by less than 1 percent from the year-ago level of P86.54 billion.
These major institutions account for about 90 percent of the banking industry’s assets and resources.
The rate of growth recorded at the end of September was slower than the 6.3-percent expansion at the end of June.
Muted earnings growth is in line with expectations for the industry, with many players aggressively expanding mortgage, car loan, and credit card businesses. Efforts to reach more retail customers are meant to help banks offset losses from financial investments, due to rising interest rates.
In recent months, regulators have imposed higher capitalization requirements and other prudential restrictions to curb lending to certain industries, particularly real estate.
Banks’ net interest income rose to P208.58 billion, up 7.55 percent year-on-year. Non-interest income, which banks get from fee-based services, declined 1.15 percent to P86.28 billion.
Meanwhile, non-interest expenses increased 6.59 percent to P186.64 billion. These expenses include salaries, taxes, commissions paid, and depreciation, among others.
At the end of the third quarter, the sub-sector’s net interest margin stood at 3.02 percent, slightly lower than last year’s 3.15 percent. Returns on assets was at 1.24 percent from last year’s 1.14 percent, while return on equity stood at 10.09 percent from 9.89 percent.