Bank deposits grew in Nov. 2011, BSP says

Bank deposits further grew in November last year on the back of rising income levels and sustained public confidence in the country’s banking sector, according to the Bangko Sentral ng Pilipinas.

BSP data showed that savings and time deposits placed in banks amounted to P3.9 trillion by the end of November, growing year on year by 7.3 percent.

About half of the deposits were in the form of regular savings accounts, and the rest were demand and long-term deposits.

“Deposits remained the primary sources of funds for banks. The continued growth in deposits reflected sustained confidence in the banking system,” the BSP said in a report.

The increasing amount of money placed in banks was aided by efforts of the financial institutions to expand operations through establishment of more branches.

Data also showed that as of the end of the first semester, the total banking network—composed of head offices and branches of banks—stood at 8,915, up from 8,685 as of the same period the previous year.

Over the same period, the total number of banking industry players (counted in terms of the number of head offices) settled at 746, down from 773.

Monetary officials said that with the growing deposit base, banks are urged to lend more this year even if credit growth last year already stood at over 20 percent, the fastest pace in over two years.

Although bank lending grew significantly last year, officials said there is still much room for banks to lend more to help accelerate growth of the economy.

Loans-to-deposit ratio in the country’s banking system is estimated at around 60 percent, and analysts said banks can increase the figure to as high as 80 or even 90 percent and still remain within prudent levels of lending.

Nonetheless, officials said banks are expected to maintain prudent lending standards as they extend more credit. They said banks should strike a balance between supporting the economy through higher lending and keeping their exposure to bad debts within comfortable levels.

Non-performing loans (NPL) ratio of universal and commercial banks in the country averaged at 3.2 percent by the end of October 2011, about the same level seen prior to the Asian financial crisis of 1997.