Banks’ resources rose 6.8 percent in February to P7.54 trillion—up from the P7.06 trillion reported in the same month last year, the Bangko Sentral ng Pilipinas said.
Monetary officials believe that the rise in the banking sector’s resources—which include deposits, retained earnings and capital—may trigger an increase in lending, something the economy needs this year to accelerate growth following last year’s slowdown.
Officials said the rise in banks’ resources was driven largely by an increase in deposits—a consequence of modestly rising incomes that allowed people and enterprises to save more.
BSP data showed that universal and commercial banks accounted for bulk of the resources with P6.76 trillion. It was 7.5 percent higher than the P6.29 trillion of February last year.
Universal and commercial banks, which cater to the financial needs of large enterprises, have been urged to increase their loans to the public.
They are encouraged to use their resources to fund big-ticket investment projects, such as public infrastructure being pushed by the government.
Also, thrift banks accounted for P592.61 billion of the sector’s total resources as of end-February. This was up by 0.6 percent from the P588.86 billion of the same month last year.
Rural banks accounted for P185.64 billion of the sector’s resources—up by 2.2 percent from the P181.66 billion reported in the same period.
Thrift and rural banks are encouraged to accelerate lending to micro, small, and medium enterprises (SMEs). Lending to small businesses will help reduce poverty incidence by improving the plight of low-income earners, BSP officials.
According to economists, the Philippines is growing, but the benefits of growth have not translated into poverty reduction.
The economy grew by 3.7 percent last year, slowing down from the 7.6 percent rise reported in 2010.
The BSP said the rising resources of banks in the country should help them accelerate growth in lending and help counter last year’s economic slowdown.
Outstanding loans from banks grew by nearly 20 percent in 2011 to about P2.7 trillion.
The BSP said that despite the substantial growth in loans last year, banks now have even more resources to further expand their lending activities.