Banking sector’s deposit base hit P5T in Q1

Bank deposits in the country hit the P5-trillion mark as of the end of the first quarter, as rising incomes encouraged households and enterprises to save more.

Philippine Deposit Insurance Corp. (PDIC) said Thursday that total deposits placed in banks reached P5 trillion in end-March, up by nearly 9 percent from P4.59 trillion in the same period last year.

“The continued growth of bank deposits is indicative of the continued confidence of the public in the banking system and the Filipinos’ predisposition to save for the rainy days,” Valentin Araneta, newly appointed president of PDIC, said in a statement.

Of the total amount, P884.86 billion is fully covered by deposit insurance provided by PDIC. These are accounts with deposits of P500,000 or less.

Data showed that 56 percent of the deposits in the banking sector are accounted for by individuals. Private corporations account for only about 30 percent, while the balance is owned by government entities.

In terms of deposit type, 47 percent of the deposits are regular savings accounts, while time deposits (long-term negotiable certificate of deposits) account for 34 percent. The balance is accounted for by demand deposits.

Industry players earlier said lending by the country’s banking sector could grow by at least 10 percent this year from a year ago, aided by the rising amount of deposits.

Latest data from the Bangko Sentral ng Pilipinas showed that the total loan portfolio of banks grew year on year by 14 percent to P2.4 trillion by the end of April.

The BSP said lending growth would help fuel growth of the economy this year, as it did last year.

Despite the double-digit growth in lending, some economists said the banking sector could actually lend some more given its huge resources. They suggested that banks use more of the resources, led by deposits, to lend more so banks could help the economy grow at an even faster pace.

This year, the economy is expected to grow by between 5 and 6 percent. Economists said this was a respectable rate, although slower than last year’s actual growth of 7.6 percent, the fastest pace registered in over three decades.