Banks’ trust assets grow 2.4% in Q3

Banks’ trusts business went up by 2.40 percent year-on-year to 12.470 trillion as of end-September from 12.412 trillion, based on Bangko Sentral ng Pilipinas (BSP) data.

The big banks accounted for 12.424 trillion while thrift banks contributed 145.255 billion. Both are higher compared to what was reported in 2017 of 12.368 trillion and 143.884 billion, respectively.

Financial assets accounted for the biggest share in total assets followed by deposits in banks.

Net financial assets slipped 0.79 percent to 11.242 trillion from 11.252 trillion while net loans also decreased by 5.40 percent to 141.171 billion from 143.523 billion.

Deposit in banks went up by 5.13 percent to 1809.664 billion from 1770.091 billion. Total banks’ cash and due, in the meantime, stood at 11.295 trillion, down by 36.45 percent from same time last year of 12.038 trillion.

The banking system’s trust accountabilities include unit investment trust funds (UITF), employee benefit, pre-need and personal trust, as well as agency trust and other fiduciary services.

As of end-September, UITFs totaled 1473.644 billion, down by 24.32 percent from 1625.941 billion same time last year. Pre-need trusts also fell by 2.03 percent to 176.068 billion from 177.644 billion.

Trust assets are invested in debt and equity securities and most of these investments are booked as financial assets held-for-trading and available-for-sale.

Last month in an amended rule, the BSP changed a provision in the “Basic Standards in the Administration of Trust, Other Fiduciary Accounts (TOFAI and Investment Management Accounts (lMA)” for clients referred to as “conservative.”

According to BSP Circular No. 1020, trust entities “may already invest their existing money market UlTFs for conservative clients in securities issued by the National Government” but with conditions.

By BSP description, a conservative client is one who wants an investment strategy where the primary goal is to prevent the loss of principal, and where the client prefers investment grade and highly liquid assets, government securities, Republic of the Philippines’ bonds, deposits with local banks/branches of foreign banks operating in the Philippines, and/or deposits with financial institutions in any foreign country, said the BSP. Investment grade credit rating should come from a reputable international credit rating agency.