Lower borrowing and financing costs drove banking assets higher to P27.26 trillion as of the end-May, up 6.38 percent year-on-year, Bangko Sentral ng Pilipinas (BSP) data showed.
Jonathan Ravelas, senior adviser at Reyes Tacandong and Co., said banking assets continued to improve because of low and manageable inflation and the central bank’s easing monetary policy.
“This will help lessen slowing growth risks amid rising global uncertainty,” he said.
“Continued growth in banks’ total assets/resources also reflects continued growth in banks’ earnings/net income, as one of the most profitable industries in the country,” Chief Economist Michael Ricafort of Rizal Commercial Banking Corp. said.
The total assets of Philippine banks increased by 6.38 percent compared with the previous year, reaching PHP 25.622 trillion.
Stable deposits, loans, and investments support total assets. It includes cash and due from banks, total loan portfolio, net investments, real and other properties acquired (ROPA), and other assets held by banks.
The banking sector’s total liabilities, meanwhile, increased by 5.70 percent to P23.787 trillion as of end-May from P22.503 trillion a year earlier.
Liabilities include banks’ financial obligations, deposit liabilities, bills and bonds payable, and unsecured subordinated debt, among others.
Banks’ net loans – which include interbank loans and reverse repurchase — rose 12.67 percent to P15.120 trillion from P13.419 trillion a year earlier, based on BSP data.
Banks’ net investments as of end-May rose 6.49 percent to P7.956 trillion from P7.471 trillion in 2024. Net investments are financial assets and equity investments.
The cash and due from banks, or cash on hand and banks’ receivables among others, however, dropped by 26.42 percent to P1.980 trillion, versus P2.691 trillion.
The banks’ net ROPA climbed 11.89 percent to P121.061 trillion from P108.189 trillion in the previous year. ROPA refers to acquired assets by banks, mostly acquired through the settlement of a loan from a borrower through foreclosure or dation in payment.
By banking group, the 44 large banks, including universal and commercial banks, had total assets of P25.489 trillion as of the end of May, while total liabilities stood at P22.304 trillion.
The combined assets of the 42 thrift banks reached P1.265 trillion, while total liabilities amounted to P1.069 trillion.
The six digital banks have total assets of P133.498 billion, while their liabilities totaled P118.560 billion.
Meanwhile, the 375 rural banking sector, including cooperative banks, posted total assets of P499.461 billion as of the end of March. Total liabilities were at P408.554 billion. The smaller banks have a lag time in reporting their banking assets.
The banking system’s asset mix is primarily composed of loans and investments, with the growth in assets mainly driven by the big banks, which account for about 93 percent of total assets.
Ricafort said continued growth in banks’ assets reflects the sustained double-digit growth in loans and bank deposits – “both of which are faster/better than overall economic/GDP growth.”
The BSP’s policy rate cuts since August 2024, which reduced the borrowing and financing costs, also “helped increase demand for loans/credit.” The BSP benchmark rate is now lower at 5.25 percent as of June this year.
Ricafort said the cumulative cuts in the reserve requirement ratio (RRR) of 450 basis points since October last year also encouraged more borrowers to take out loans.
He said the lower borrowing costs “eased the burden of some borrowers and improved their ability to pay their loans.”
The RRR cuts, likewise, increased banks’ loanable funds by more than P700 billion and “reduced intermediation costs that further reduced borrowing/financing costs,” he added.
