Bank resources grow 11.08% in 2016 – BSP

The total resources of the banking industry increased by 11.08 percent in 2016 to R13.875 trillion compared to the previous year’s R12.406 trillion on sustained loans and deposits growth despite market volatility pressures.

Based on Bangko Sentral ng Pilipinas (BSP) data, the large lenders or the universal and commercial banks continue to account for about 93 percent of total resources.

At the end of 2016, big banks reported R12.545 trillion of total resources, higher than 2015’s R11.159 trillion by 12.42 percent.

The central bank said local banks are “sound and stable” and are keeping the domestic economy up. “We have put in place reforms to further strengthen governance and risk management in banks,” according to BSP Governor Amando M. Tetangco Jr.

The industry is topped by 41 universal and commercial banks while there are 64 thrift banks.

The thrift banking sector had total resources of R1.104 trillion at the end of 2016, slightly changed from the previous year’s R1.034 trilion or a difference of 6.76 percent.

The smaller rural banks’ total resources last year stood at R226.3 billion but this was as of end-September 2016 since the sector’s data have a longer lag time compared to the midsized and larger banks. Rural banks’ resources are higher compared to 2015’s R213 billion.

Non-banks’ resources in the meantime amounted to R3.114 trillion as of end-September 2016. This was 4.67 percent more than the previous year’s R2.975 billion. These non-banks are investment houses, finance companies, investment firms, pawnshops and securities dealers/ brokers.

With a growing resource base, local banks have also strengthened capital buffers in preparation for stiffer competition particularly from foreign financial institutions.

With the ASEAN market and financial integration, banking sectors across the region are setting up measures to ensure integration will achieve its purpose – mainly to attract foreign direct investments.

After the government liberalized foreign bank entry with the amended version of the law in 2014, nine foreign banks have established local operations under the new environment.

Tetangco said in January that at least six more foreign banks are poised to enter the market after “expressing interests” to the BSP.

The new law permits foreign banks to acquire up to 100 percent of the voting stock of an existing domestic bank, from the previous 60 percent limit. Basically, the BSP opened up to 40 percent of the total banking assets to foreigners.