PH system sustains growth

The Philippine financial system sustained its growth in 2017 with a positive performance amid volatilities in market conditions and the increasing sophistication of global financial services.

The banking system, which is the core of the financial system, remained sound as shown by the further strengthening of banks’ balance sheets with positive double-digit growth in assets, loans, investments, deposits and capital. Banks sustained their profitability which came from strong interest income from lending activities.

The banking system posted an annual asset expansion of 11.6 percent to P15.2 trillion driven by a 16.4 percent loan expansion to P8.9 trillion and funded by the stable base of deposits which grew by 11.6 percent to P11.7 trillion. Meanwhile, net profit went up by 9.0 percent to P167.6 billion.

Banks also reported an improvement in non-performing loan (NPL) ratio to 1.7 percent and a strong capital adequacy ratio (CAR) of 15.0 percent1. Banks likewise kept sufficient liquidity with adequate stock of high-quality liquid assets (HQLAs) as the liquidity coverage ratio registered at 185.3 percent on solo basis.

The banking system’s foreign currency deposit unit (FCDU) system exhibited strong liquidity and positive net profit.

Growth in the trust industry’s total assets was lifted by the expansion in the stock of financial assets. Foreign bank branches and subsidiaries also sustained growth trajectories as 26 foreign banks were approved and authorized to operate by the BSP in the Philippines as of December 2017.