Bank deposits up 7.7% to P12.8 T

More Filipinos are keeping their money in banks as total deposits went up by 7.7 percent to P12.8 trillion as of end-March, according to the Bangko Sentral ng Pilipinas (BSP).

The central bank said demand deposits inched up by 1.9 percent quarter-on-quarter, while savings deposits slipped by 1.6 percent and time deposits declined by 5.4 percent.

The BSP also reported that foreign currency deposits owned by residents grew by 2.5 percent to P2.3 trillion as of end-March.

Deposits remain the primary source of funds for the Philippine banking system.

As a result, the total assets of Philippine banks rose by 7.1 percent to P21.5 trillion in end-March this year.

As a percent of the country’s gross domestic product (GDP), the industry’s total resources stood at 107.5 percent.

The banking system assets and deposits continued to grow despite the impact of the pandemic, reflecting resilience and stability as the country’s economic activities and financial transactions continued to recover from the disruptions.

As part of its COVID response measures, the BSP slashed interest rates by 200 basis points, bringing the benchmark rate to an all-time low of two percent. It also reduced the reserve requirement ratio to free up more funds for lending.

The measures to cushion the impact of COVID-19 on the economy helped unleash P2.23 trillion into the financial system to boost economic activities.

However, the BSP started its interest rate liftoff last May to curb rising inflationary pressures from the impact of supply disruptions, the Russia-Ukraine war, the hawkish US Federal Reserve and the weakening of the peso.

Since May, the central bank has raised interest rates by a total of 125 basis points, including the huge 75 basis points delivered during a surprise off-cycle rate-setting meeting on July 14.

BSP Governor Felipe Medalla said the central bank is poised to raise the interest rates anew on its next rate-setting meeting scheduled on Aug. 18.

The number of banks operating in the country declined to 499 in end-March from 506 in end December last year due to the continued consolidation of banks and the closure of weak players.

The operating banks include 45 universal and commercial banks, 45 thrift banks, 407 rural banks and two digital banks.

Meanwhile, the number of branches increased to 13,182 in end-March from 13,154 in end-December.