Bank resources grow 12.32% in May

The banking sector’s total resources increased by 12.32 percent year-on-year to R14.2 trillion as of end-May, boosted by continued growth in capital and assets.

Based on data from the Bangko Sentral ng Pilipinas (BSP), the country’s biggest banks’ resources amounted to R12.8 trillion during the period, up 12.62 percent from the same period last year of R11.36 trillion. The big banks control more than 90 percent of resources.

Thrift banks, in the meantime, sustained R1.16 trillion of resources as of end-May, higher compared to the previous year’s R1.05 trillion.

Including non-banks which had R3.32 trillion worth of resources during the period, the entire financial system reported R17.52 trillion of total resources, up 10.53 percent year-on-year.

Based on the BSP’s first quarter financial inclusion dashboard data, despite improved access to financing by local borrowers, the big banks still have a hard time complying with the law in terms of lending to both the micro, small and medium enterprises (MSME) and setting aside funds for agri-agra loans.

As of end-March, banks released only R195.15 billion of loans to MSMEs out of R471.25 billion that banks should have allotted for these types of loans at a minimum. Medium-sized enterprises, on the other hand, accounted for R299.7 billion of loans which surpassed the minimum requirement by R181.93 billion.

Under the Magna Carta Law or Republic Act No. 9501, banks are mandated to lend eight percent of its total loan portfolio to MSMEs and two percent for medium-sized enterprises. During the period, banks’ MSME loans only reached 3.3 percent of minimum while medium-sized enterprises’ loans was at 5.1 percent. Still, banks are not lending as much to MSMEs and would just pay the penalties for non-compliance of the law.

Part of BSP efforts to encouraged funding to MSMEs is the establishment of the Credit Surety Fund which provides a surety cover for MSMEs as they access formal financing.