PHL banking system remained strong amid negative external environment in H1 ’15

By Joann Santiago

MANILA, Nov. 4 (PNA) — Resiliency and strength of the Philippines’ financial system remain intact amidst the negative external environment.

According the Bangko Sentral ng Pilipinas (BSP), the banking system continues to strongly back the country’s financial system as it accounts for about 80.8 percent of the system.

Resources of the financial system reached Php 11.2 trillion as of end-June 2015, up nine percent year-on-year.

The central bank said risk-taking activities of the financial institutions, aimed to ensure getting maximum returns, were reflected in the shift of funds.

Investment portfolio rose 13.3 percent and loans portfolio went up 12.9 percent.

On the other hand, cash-and-due from banks declined by 2.5 percent.

“Despite the moderation in credit allocation particularly with the real estate sector, the BSP remains proactive in its surveillance and use of macroprudential tools to mitigate the buildup of systemic risks,” the central bank said.

The high liquidity situation in the country also boosted the funding profile of the system, due mainly to the retail and domestic-oriented deposit liabilities.

The BSP said total deposit liabilities rose by nine percent at the end of the first half this year.

This, however, is lower than the 18.3 percent growth it posted in 2013 “on account of more alternative investment products like insurance variables in the market with more competitive rates as compared to deposit interest rate.”

The BSP said financial institutions’ risk appetite on loan and investment portfolio was an advantage to the system resulting in an 8.1 percent growth of net profit to Php 68.9 billion year-on-year as of last June.

“This was supported by strong expansions in interest-based revenues (7.8 percent) and non-interest based income (11.0 percent),” it said.

The central bank also cited that trading income posted a 35.9 percent rise during the same time because of favorable market sentiment.

It pointed out that “the country’s archipelagic landscape provides challenges and opportunities in the provision of much needed financial services particularly in remote rural areas.”

Thus, the central bank “continues to be responsive by building on its financial inclusion agenda through reforms in the provision of innovative financial products and services in the countryside.”

The central bank reports that as of end-June this year, there were 638 operating banks with 9,890 branches around the country.

Of these, 268 were offering various electronic banking (e-banking) services like electronic wallet (e-wallet), cash or remittance products, internet banking, phone banking, mobile banking and hybrid mobile/internet via BancNet-MegaLink switch banking service in the Philippines.

“Notwithstanding the sustained positive performance of the financial system, the BSP continues to closely monitor potential pressure points. This is in line with the BSP’s objective of promoting greater financial stability,” the central bank added. (PNA)