Phl banks earn record P154 B

Philippine banks booked a double-digit earnings growth of 14 percent to hit a record P154.12 billion last year amid the volatile global financial markets due to the rate hike by the US Federal Reserve and the decision of the United Kingdom to leave the European Union.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the net income of banks last year was P18.78 billion higher than the P135.34 recorded in 2015.

The interest income of Philippine banks grew 9.8 percent to P496.98 billion last year from P452.51 billion in the period last year, while interest expense rose 9.7 percent to P111.99 billion from P103.02 billion.

This translated to a 10.2 percent rise in net interest income to P384.71 billion from P349.15 billion, while non-interest income grew 13.7 percent to P148.41 billion from P130.52 billion.

The trading income of Philippine banks fell 23.5 percent to P54.23 billion last year from P70.87 billion in 2015 as institutions continued to reduce their exposure in stocks.

Amid the continued weakening of the peso, gains of banks from foreign exchange transactions zoomed 25.1 percent to P11.51 billion from P9.2 billion, while foreign exchange profit declined 6.6 percent to P6.88 billion from P7.37 billion.

Non-interest expenses went up by 9.5 percent to P339.89 billion from P310.38 billion.

The profits of universal and commercial banks increased 13.8 percent to P136.95 billion last year from P120.27 billion in 2015, while that of thrift or mid-sized banks rose 17.9 percent to P13.89 billion from P11.78 billion.

BSP Governor Amando Tetangco Jr. earlier said the Philippine banking industry continued to play a significant role in helping sustain the pace of the country’s economic growth.

Latest data from the central bank showed bank lending rose 17.4 percent to P6.3 trillion at end December last year from P5.29 trillion at end December 2015.

Total assets of the banking industry reached P13.2 trillion, posting a 12.4 percent growth from the November 2015 level, while deposits increased by 13.5 percent to an all-time high of P10.1 trillion.

“Significantly, asset quality improved further with non-performing loans at two percent, while capitalization remained comfortably above the minimum required under national and international standards. And the banks continued to report profits,” Tetangco said.

On the other hand, Fitch Ratings expects credit growth in the mid- to high- teens against this backdrop amid the current administration’s plans to accelerate infrastructure spending which could provide an added boost to domestic activity, and the authorities retain adequate policy flexibility to offset a weakening in economic conditions or greater financial market volatility.