Philippine banks have reported faster rate of rise in resources at the end of the first semester, buoyed largely by rising deposits from individuals and enterprises.
Combined resources of universal and commercial, thrift and rural banks amounted to P7.3 trillion by end-June this year, rising by 12.6 percent from the P6.48 trillion reported in the same period last year, a report from the Bangko Sentral ng Pilipinas showed.
The BSP said that the double-digit growth in deposits and total resources of banks indicated an increase in the income levels of individuals and entities, which enabled the general public to save more.
The central bank also said that the growth figure reflected strong confidence in the banking sector.
“Savings and time deposits remained the banks’ main sources of funds….Growth in deposits was indicative of sustained depositor confidence in the banking system,” the BSP said in the report.
The BSP said rising resources of banks allowed the institutions to better support the economy through greater lending.
The rise in resources of the banking sector was aided by the move of industry members to continue expanding their operations by branching out.
Latest data on bank branches and offices showed that, by the end of the first quarter, the operating network of the banking sector increased to 8,870 from 8,663 by the end of the same period last year.
But while the operating network of the banking system grew, the number of industry players actually shrunk.
The BSP said this was due to consolidation, such as mergers and acquisitions, and the closure of weak industry players.
Data from the BSP showed that the number of institutions in the country stood at 746 by the end of March, down from 779 by the same period last year.
Among the banks that were ordered closed due to insolvency were Banco Filipino and LBC Development Bank.
At present, the BSP is pushing for further consolidation in the banking sector, encouraging more big banks to take over weaker institutions.
Central bank officials believe that there are currently too many players in the banking sector.
Having fewer but stronger players would be ideal, they explained.
The regulator said that in general, banks in the country are enjoying rising profitability and resources, low exposure to bad debts, and more than adequate capitalization.