Thrift banks’ income jumps 16.57% in Q3

Billion

Thrift banks posted a 16.57 percent net income gain as of endSeptember to 8.44 billion from 7.24 billion the same time in 2014.

Based on Bangko Sentral ng Pilipinas (BSP) data, the mid-sized sector had a cumulative net interest income of 35.16 billion as of the end of the first nine months, up 17.39 percent from 29.95 billion in 2014. These are earnings sourced from traditional banking services, mainly lending and deposit-taking.

Its non-interest income which come from trading gains, however slipped 1.25 percent to 8.68 billion from 8.79 billion last year.

Thrift banks’ net interest margin was higher at 5.43 percent compared to the same time in 2014 of 5.25 percent as earnings from loans improved with the increase in borrowers. Thrift banks have a larger share of consumer loan market such as housing/property and automotive loans.

Cost-to-income ratio fell to 65.41 percent from 69.14 percent in 2014, which means banks’ efforts to improve operational efficiency has met with some success.

Relevant key ratios such as return on assets and return on equity stood at 1.29 percent and 10.58 percent, respectively, which was higher compared to September 2014’s 0.97 percent and 8.25 percent.

As thrift banks’ financial services improve, its assets under management is also growing. As of end-June, the sector had 33.22 billion of AUM, up 12.25 percent from the same period in 2014 of 29.59 billion.

The industry’s cash and due from banks increased by four percent to 5.849 billion during the period, from 5.619 billion last year. Deposits in banks, on the other hand, went up by 33.34 percent to 5.87 billion from 4.4 billion while net financial assets decreased by 6.29 percent to 17.15 billion from 18.3 billion.

Thrift banks’ portfolio of managed assets are expected to be enhanced following an approval by the BSP to expand the list of banks authorized to transact as dealers of deliverable foreign exchange forwards. In other words these banks are now allowed to act as foreign exchange forwards dealers.

The objective is to improve the foreign exchange risk hedging options of small and medium enterprises which are the clientele of thrift banks.

The BSP said it will tighten regulations such as in capital requirements to supplement this expanded authority, and that thrift banks are expected to have “appropriate practices” for the selling and marketing of foreign exchange forwards.