Finance sector’s assets surged to $3.8T in ’11

Assets being managed by the country’s financial sector surged to $3.8 trillion by the end of 2011.

Regulators said this was due to rising incomes seen throughout the country.

Citing industry data, the Bangko Sentral ng Pilipinas reported that the latest amount of assets under management was about three times more than the P1.27 trillion registered by the end of 2008.

The central bank said the rise in assets being managed by banks and other institutions in the country over the three-year period indicated growth in the country’s liquidity, even during a period of financial turmoil, which peaked in 2009, when several advanced economies underwent a recession.

The latest amount of assets under management was also up by 40 percent from the P2.7 trillion reported at the end of September 2011.

In a speech delivered recently during an event attended by members of the Fund Managers Association of the Philippines (FMAP), BSP Governor Amando Tetangco Jr. said the growth in assets suggested that banks and other financial institutions had undertaken prudent strategies.

Nonetheless, Tetangco said the industry must continue to be cautious of risks, citing challenges stemming from the prolonged debt crisis in Europe.

The crisis, which has dampened appetite of foreign fund owners worldwide, has the potential of causing “de-leveraging”—the act of liquefying assets—as more investors decide to hold on to their cash, he said.

This will only adversely affect emerging markets like the Philippines, he added.

Tetangco said market volatilities that could result from the problems in Europe should keep fund managers in the Philippines always on guard.

He said investment decisions should be prudent to protect investors.

“With increased mobility of capital across global financial centers, the domestic financial market has become more vulnerable to external developments,” the central bank chief said in a speech delivered during an assembly of members of the Fund Managers Association of the Philippines held on Wednesday.

“The uncertainties across the globe have become more easily translated into volatilities in the domestic financial markets, complicating both how you manage funds and how we manage policy,” Tetangco also said.

He said the declining interest rates in the country could result in lower margins for fund managers. He warned the industry against the tendency to purchase riskier assets just to maintain their earnings.

He also reminded industry players to maintain prudence, and to strike a balance between the desire for higher earnings and the need to stay protected against too much risk.