Bank profit seen rising further as PPP program gains traction

The profitability of local banks is seen further improving in the next quarters as they generate more interest earnings from the extension of loans for big-ticket, public infrastructure projects.

According to Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas, the combined profit of the country’s banking sector should further increase once the Public-Private Partnership (PPP) program of the government goes into full swing.

Banks are expected to easily meet loan requirements for infrastructure projects because of their growing resources.

“There is ample liquidity in the domestic market, and as the government’s infrastructure projects go full-swing in the next few quarters, we should see some of that domestic liquidity getting channeled accordingly,” Tetangco said.

Data from the BSP showed that the combined net income of universal and commercial banks in the country amounted to P30.45 billion in the first quarter, up 41 percent from P21.6 billion in the same period last year.

Moreover, deposits placed in universal and commercial banks reached P6.38 billion, up 5.5 percent from P6.08 billion.

The growing deposits account for the bulk of resources used by banks for lending. Because deposits are on the rise, the banking sector is expected to continue lending to individuals and enterprises.

Outstanding loans of the universal and commercial banks hit P2.88 trillion as of end-May, up by 14.7 percent from the P2.51 trillion recorded in the same period last year.