Banks’ resources still on the rise

Resources of the country’s banking sector grew further in January, yet again signaling faster growth of the economy this year, monetary officials said.

Data from the Bangko Sentral ng Pilipinas said the resources of universal/commercial, thrift, and rural banks in the country amounted to P7.4 trillion by the end of January, rising by nearly 6 percent from P7 trillion as of the same period last year.

The growth in resources was driven by higher deposits from the public and an increase in profitability of banks.

Officials said the continuing rise in banks’ savings deposits reflected the people’s confidence on the ability of Philippine institutions to manage their money. They said public confidence in banks had been partly aided by favorable financial performance of the sector.

Data further showed that universal and commercial banks (UKBs) accounted for bulk of the banking sector’s resources. Total resources of UKBs amounted to P6.66 trillion, rising year on year by 7 percent from P6.21 trillion.

Thrift banks accounted for P594 billion of total resources. This amount represented a 2-percent decline from the P609 billion reported in the same period last year.

Rural banks took up P185.64 billion of the banking sector’s resources—up by 2.2 percent from P181.66 billion.

Monetary officials have been urging banks to use their significant resources to support more economic activities by offering more loans.

Bank lending actually grew close to 20 percent last year, but the BSP said banks should lend more.

They said banks could afford to lend more as their exposure to bad debts remained within comfortable levels.

Average non-performing loans ratio of UKBs stood at 2.34 percent in February—down from 2.93 percent in the same month last year.

The NPL ratio of UKBs fell below the 3-percent threshold last year. The BSP said the present levels are now the same as those seen prior to the Asian financial crisis.

But while banks are encouraged to lend more, regulators said they are also expected to maintain prudent lending standards to minimize risks of loan defaults.