MANILA, Philippines-The combined resources of the country’s banking sector rose in 2011 from the previous year, making monetary officials confident that banks will be able to support government efforts to accelerate economic growth this year following last year’s slowdown.
The increase in resources was driven mainly by increase in deposits, which the Bangko Sentral ng Pilipinas attributed to rising income levels that allowed people and enterprises to save more.
The BSP likewise credited sound management of banks for the increase in higher profits, which likewise contributed to the industry’s rising resources.
Resources of the banking sector—composed of universal/commercial banks, thrift banks, and rural banks—amounted to P7.61 trillion by the end of 2011, rising by 5.3 percent from P7.23 trillion the previous year.
Universal/commercial banks, which primarily cater to the financial services needs of large enterprises, accounted for the bulk, or P6.83 trillion, of the total resources of the banking sector by end-2011. The amount represented a year-on-year growth of 6.4 percent from P6.42 trillion.
The increase in resources of banks enabled them to lend much more last year. Bank lending grew by almost 20 percent last year from the 2010 level, as the huge liquidity allowed credit expansion.
Nonetheless, the BSP said there is still a significant room for banks to lend much more. It said banks are encouraged to tap more of their resources to increase lending to consumers and enterprises this year, and thus help speed up economic growth.
The economy grew by 3.7 percent last year, slowing down from the 7.6 percent registered in 2010. The deceleration came about even with the robust increase in bank lending because of the decline in the country’s export earnings and shortfall in public spending.
The government is hoping to reverse last year’s slowdown and for the economy to grow between 5 and 6 percent this year, vowing to spend more on public infrastructure and social services.
Economic managers, however, said private sector should also help in speeding up growth by investing more.—Michelle V. Remo