Resources of the banking sector grew in the first quarter, boosting its ability to extend more loans to support more investments and increased consumption in the months ahead.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that combined resources of universal and commercial banks, thrift banks and rural banks reached P7.46 trillion as of the end of the first quarter, up by 4.8 percent from P7.12 trillion a year ago. Resources are driven largely by deposits from the public, and are also composed of retained earnings and capital.
Monetary officials said the increase indicated that the banking industry was capable of servicing higher loan demand from enterprises and consumers. This backdrop provides optimism that the economy can hit the growth targets set by the government, at least, over the short term, they said.
Of the total resources as of end-March, P6.67 trillion was held by universal and commercial banks, which cater mostly to large corporate clients. This was up by 5 percent from P6.35 trillion a year ago.
Sustained profitability of banks in the country, especially of universal and commercial banks, indicate they are not significantly affected by the unfavorable global economic picture, officials said. The BSP said banks in the country had “very minimal” exposure to the eurozone, which continues to suffer from a debt crisis.
Investments by Philippine banks in euro-denominated assets account for less than 2 percent of their total assets, the BSP said. Philippine banks also have sufficient capital to absorb potential losses in case corporate clients with exposure to the eurozone default on their loans.
Thrift banks accounted for P608.61 billion of the total resources as of end-March. This was up by 3.6 percent from P587.45 billion a year ago.
The thrift banking subsector, which caters mostly to medium-sized enterprises and to consumers, likewise enjoys rising resources as a general increase in incomes allows more people and enterprises to increase their deposits.
Rural banks accounted for P185.64 billion of the total resources, up by 2.2 percent from P181.66 billion.
The growing resources of the rural banking subsector indicate economic activities in rural areas are likewise improving, monetary officials said.