More than two years into the pandemic, the Philippine banking system (PBS) sustained its solid footing as shown by the continued growth in assets, loans and deposits as well as ample capital, liquidity buffers and loan loss reserves.
The Bangko Sentral ng Pilipinas said total banking system assets posted an annual 7.0 percent growth to P20.4 trillion as of end-November 2021.
Data showed asset expansion was primarily funded by deposits which increased by 9.2 percent year-on-year to P15.8 trillion over the same period.
Benjamin Diokno, BSP Governor, said this indicates the continued trust and confidence of the public in the banking system.
“The strong performance of the banking system amid this crisis is due to its strong fundamentals supported by deep financial sector reforms,” Diokno said.
He added that the BSP’s timely and well-calibrated operational and prudential relief measures proved instrumental in helping banks cope with the impact of the COVID-19 pandemic.
He added that credit activity also showed signs of recovery as loans rose 4.3 percent as of end-November 2021, reversing a 0.1 percent contraction a year ago.
“Favorable market outlook, rising vaccination coverage in the country, and the BSP credit-related relief measures are expected to further boost market confidence and encourage bank lending,” diokn o said.
Data also showed that the level of non-performing loans (NPLs) also remained manageable and within the BSP’s expectations.
As of end-November 2021, the gross NPL ratio of the PBS stood at 4.3 percent, higher than the 3.8 percent ratio from a year ago but lower than 4.4 percent in October 2021.
“In relation to this, banks allotted sufficient reserves with an NPL coverage ratio of 87.1 percent. Moreover, the recently issued relief measures on the prudential treatment of restructured loans and provisioning requirements alongside the full implementation of the Financial Institutions Strategic Transfer Act are seen to reinforce banks’ NPL management,” Diokno said.
The central bank chief also stressed banks maintained sufficient capital and liquidity buffers.
As of end-September 2021, the Capital Adequacy Ratio of the universal and commercial bank industry further improved to 16.9 percent and 17.4 percent on solo and consolidated bases respectively.
These figures are well above the 10 percent regulatory minimum required by the BSP and the 8 percent by the Bank for International Settlements.
Liquidity buffers also remained significantly higher than the minimum threshold of 100 percent, as the universal banking industry’s solo liquidity coverage ratio reached 197.5 percent as of end-October 2021.
Meanwhile, the minimum liquidity ratios of stand-alone thrift, rural and cooperative banks exceeded the 20 percent minimum.
“The strong liquidity position of banks enabled them to continue extending credit support to fuel economic activities,” Diokno said.
For the year 2022, Diokno said the BSP will continue its reform agenda to ensure “a safe, sound, and resilient financial system that supports the country’s recovery as well as its balanced, inclusive, and sustainable economic growth.”
