Banks' higher assets, equals stability – BSP

Banks' higher assets, equals stability – BSP
04/04/2011 | 04:06 PM
    
 
(Updated: 5 p.m.) Philippine banks were stable last year, posting P7.23 trillion in total assets from P720 billion in 2009, as Filipinos saved more and their deposits were used to fund new loans, the Bangko Sentral ng Pilipinas said Monday.

"The increase could be traced to the growth in currency and deposits, indicative of the public's continued trust in the banking sector," the Bangko Sentral said in its "Report on Economic and Financial Developments for the fourth quarter 2010."

Resources of universal and commercial banks expanded by 11 percent to P6.42 trillion from P5.78 trillion, accounting for about 89 percent of the industry's total assets.

The assets of thrift banks, on the other hand, grew 13.1 percent to P629 billion from P556.1 billion, reflecting 8.7 percent of the industry's total assets.

Bank deposits rose 11.5 percent to P3.8 trillion in the first 11 months of 2010. Data showed that savings deposits grew 10 percent and accounted for nearly half of the funding base from January to November last year while demand or checking accounts expanded by 14.4 percent, and time deposits by 11.8 percent.

"Savings and time deposits remained the banks' main sources of funds," the BSP said in its 79-page report.

Dwindling number of banks

The BSP said the number of banks dropped to 758 from 785 in the 2010-2009 comparable period because of mergers and closures of some banks. The number of universal and commercial banks was steady at 38 and thrift banks at 73, but the number of rural banks fell to 647 from 674.

"This was due to the continued consolidation of banks as well as the exit of weaker players in the banking system," the BSP explained.

Despite the lower number of banks, BSP data showed the number of operating networks and their branches rose 2.9 percent to 8,869 from 8,620 as more commercial and rural bank branches have opened.

Monetary authorities led by BSP Gov. Amando Tetangco Jr. believed that 2010 was a banner year for Philippine banks contributing largely to the country's stronger-than-expected economic growth amid the fragile recovery in advanced economies led by the US as well as in debt-ridden Europe.

Tetangco earlier said the sound, stable, and liquid banking system was one of the reasons behind the sustained economic growth after the industry posted healthy growth rates in lending, deposits, and profitability in 2010.

"The banking sector has also supported this growth well by continuing to efficiently channel funds to the most productive sectors of the economy," Tetangco recently told members of the Trust Officers Association of the Philippines.

Adequately capitalized

"Meanwhile, the banking system remained adequately capitalized as major players in the banking industry successfully raised fresh equity through the issuance of various debt instruments," according to the BSP.

Philippine banks' capital adequacy ratio at 15.2 percent on solo basis and 16.2 percent in consolidated terms, as of June 2010 – the latest data available -- continued to outperform those of Malaysia's (14.6 percent) Korea's (14.6 percent).

But it was moderately lower than Thailand's 16.7 percent.

Indonesia posted the highest CAR in the region at 17.2 percent. — VS, GMA News

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