Banks bare stronger, cleaner balance sheets in first quarter
THE COUNTRY’s biggest banks opened the year on stronger footing as the first quarter sustained a streak of double-digit asset and loan growth, even as profitability slipped.
BusinessWorld’s 1st Quarter Banking Report shows the combined assets of the country’s universal and commercial banks (U/ KBs) grew by 10.97% to P15.02 trillion in the January- March period from P13.54 trillion recorded in the same three months last year.
The first quarter’s growth pace, however, was slower than the 11.51% year-on-year increase in the fourth quarter of 2017 and 13.41% in the first quarter of 2017.
Still, the latest figure marked the ninth straight quarter of doubledigit growth in the balance sheets of the local and foreign U/ KBs, now numbering 43.
Bank loans, which comprised around 54% of big banks’ assets, grew 17.8% annually to P8.07 trillion from last year’s P6.85 trillion.
In terms of profitability, the U/KBs’ median return on equity ( RoE) dipped to 5.09% in the January-March period from the preceding quarter’s 5.70%. ROE, which is the ratio of net profit to average capital, measures the amount that shareholders make on every peso invested in a company
BDO Unibank, Inc. ( BDO) continued to have the biggest assets among U/KBs, followed by Metropolitan Bank & Trust Co. (Metrobank) and the Bank of the Philippine Islands ( BPI). They were also the same banks that issued the most loans during the period, also in that order.
Among the banks with assets worth at least P100 billion, Robinsons Bank Corp. continued to post the fastest growth in assets and bank loans at 30.26% and 48.58%, respectively.
BDO had the most deposits with P2.24 trillion, followed by BPI ( P1.59 trillion) and Metrobank (P1.55 trillion).
In terms of growth in its deposit base, Robinsons Bank saw the biggest jump at 34.56%, followed by the Development Bank of the Philippines (32.53%), and Asia United Bank Corp. (22.62%).
ASSET QUALITY
Banks’ ability to absorb losses improved as their median capital adequacy ratio (CAR) went up to 18.19% in the first quarter from the fourth quarter’s 17.2%, well above the regulatory minimum of 10% set by the Bangko Sentral ng Pilipinas and the international standard of eight percent.
CAR is a measure of a bank’s ability to take losses without putting at risk the funds entrusted by depositors.
The non- performing loans (NPL) ratio of big banks increased to 1.57% in the first quarter from 1.42% in 2017’s fourth quarter.
The non- performing assets ratio — a measure of bank health that combines NPLs, foreclosed properties and total assets — likewise went up to 0.61% from 0.53% in the same comparative periods.
As a percent of total assets, foreclosed properties steadied at 0.35% from 2017’s fourth quarter.
Banks’ NPL coverage ratio — the ratio of the total loan loss reserves to gross NPL — remained more than enough to cover the entire value of bad loans held by U/KBs, improving to 152.84% from 149.39% in the same periods.
Loan loss reserves totaled P159.570 billion, 15.17% more than a year ago.
BusinessWorld Research has been tracking the financial performance of the country’s U/KBs on a quarterly basis since the late 1980s using banks’ published statements of condition.