NextGen Day

MANILA, Philippines — According to the Bangko Sentral ng Pilipinas, universal and commercial banks (U/KBs) in the Philippines maintained their expansion and continued to fulfill the country’s finance needs (BSP).

In a statement, BSP Governor Benjamin Diokno said, “Key U/KB performance indicators revealed a continuous expansion in assets, loans, and deposits, as well as maintained profitability with significant credit loss reserves, appropriate liquidity, and capital buffers.”

At the end of April 2022, U/KB assets had grown by 8.2 percent year on year (YoY) to PHP19.4 trillion, outpacing the 4-percent rise seen a year previously. Deposits, which increased by 8.7% during the same period, were the main source of funding for the expansion.

At the end of April 2022, the total loan portfolio, which mostly consisted of U/KBs’ assets, had increased by 9.8% to PHP10.7 trillion. Real estate, wholesale and retail trade and manufacturing were among the industries that received loans.

Micro, small, and medium-sized businesses received PHP334.8 billion in U/KB credit, while loans to homeowners, including residential real estate, totaled PHP1.7 trillion.

U/KB loan quality improved in tandem with strengthening economic conditions and credit activity, with the non-performing loan (NPL) ratio falling to 3.6 percent at the end of April 2022 from 3.9 percent a year earlier.

The NPL coverage ratio in the U/KB business, on the other hand, increased to 95.2 percent in April this year from 87.7 percent in April 2021.

The complete implementation of the Financial Institutions Strategic Transfer Act, as well as the extension of the effectiveness of several of the BSP’s credit-related easing measures, are expected to support continuing U/KB loan growth.

The net profit of the industry increased by 26.7 percent to PHP61.4 billion at the end of March this year, reversing a 4-percent decline in the same time in 2021.

As of end-March 2022, U/KBs were well-capitalized, with risk-based capital adequacy ratios of 16.2 and 16.8 percent on a solo and consolidated basis, respectively.

At the end of February 2022, the industry had a liquidity coverage ratio of 200.3 percent on a standalone basis, significantly over the 100 percent minimum threshold. This shows that the bank has sufficient cash to meet short-term funding needs.

The BSP remains committed to pursuing regulatory and legislative reforms aimed at ensuring a safe, sound, and resilient financial system – one that contributes to the economy’s sustained growth while supporting responsible innovation and the country’s broader sustainability agenda – despite the country’s economic recovery and positive business and consumer sentiment.

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