PH banking system’s net income at all-time high of P91B in 2010

MANILA — Net income of the country’s banking system hit an all-time high in 2010 as industry members engaged in more profitable lending and investment activities.

According to the Bangko Sentral ng Pilipinas, combined net income of universal, commercial, thrift, and rural banks in the country amounted to P91 billion last year, rising by 31 percent from P69 billion the previous year.

The BSP said the banking sector continued to enjoy confidence of the public as manifested by growth in deposits. The bigger deposit base allowed banks to lend more, and invest in portfolio instruments and other income-generating opportunities, the regulator said.

The central bank said the sound financial condition of banks in the country came amid a favorable regulatory and economic environment.

Higher income levels supported growth in deposits, which in turn allowed banks to extend more credit that aided the economy’s expansion.

“Sustained implementation of key financial sector reforms together with the improving macroeconomic environment augured well for the financial system during the year in review,” the BSP said in the “2010 Report on the Philippine Financial System” released yesterday.

Data from the central bank also showed that total assets — which include securities investments and loans receivables, among others — of the banking system reached P6.9 trillion last year, also an all-time high, up by nearly 12 percent from P6.19 trillion the previous year.

Outstanding loans amounted to P2.79 trillion, up by 8.7 percent from the previous year’s P2.57 trillion.

Meanwhile, total deposits to the banking system hit P5.12 trillion, rising by nearly 10 percent from P4.67 trillion.

Regulators said banks in the country are expected to perform favorable again this year, as they enjoy high levels of liquidity. Awash in cash, banks are seen to further increase lending and investments in securities.

Officials also expressed confidence that the country’s banking system will continue to aid consumption and investments, thus sustain a decent growth of the economy.

The growth in overall income of the country’s banking system came amid the spate of closures of rural banks.

Over the past two years, the BSP has closed down several rural banks that were suffering from liquidity and management problems.

Regulators, however, said assets of the closed banks accounted for a measly portion of the resources of the entire banking sector.

The BSP is encouraging bigger industry players to acquire troubled ones, saying having fewer but stronger players in the industry is preferable.