The combined income of universal and commercial banks in the Philippines hit P96.16 billion last year on the back of increased economic activity that pushed demand for banking services.
Data from the Bangko Sentral ng Pilipinas showed that combined net incomes of universal and commercial banks rose by 15 percent to P96.16 billion last year, from P83.36 billion in 2010.
The higher profit was driven largely by increased lending activities, as the expanding economy required more loans from banks.
The BSP earlier reported that outstanding loans from the banks grew by 19.3 percent in 2011 to P2.77 trillion, significantly faster than the 10 percent growth registered the previous year.
On the other hand, non-interest income—which includes those generated from services like consultancy, underwriting, bills payment facilitation and remittance facilitation—grew by a billion pesos to P118 billion.
BSP Governor Amando Tetangco Jr. said the Philippines is currently in a “good spot,” as it enjoys favorable macroeconomic fundamentals and a stable banking system.
He said these factors should help the country get better credit ratings in the months ahead.
The Philippines is rated one to two notches below investment grade by credit-rating agencies. It hopes to soon get investment grade rating.
Meantime, banks in the country are being urged to lend more given their profitability and their rising resources, which are also being driven by increasing deposits from the public.
Although outstanding loans of universal and commercial banks grew by 19.3 percent last year, regulators and economists said banks can afford to lend even more.
Based on industry estimates, outstanding bank loans are equivalent to only between 60 and 70 percent of deposits kept in banks.
By lending more, banks can further contribute to economic growth.
The Philippine economy grew by 3.7 percent last year and the government aims to accelerate the pace to between 5 and 6 percent this year.