By Luisa Maria Jacinta C. Jocson, Reporter
THE TOTAL RESOURCES of the Philippine financial system rose by 7.9% as of January, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
The resources of banks and nonbank financial institutions increased to P33.66 trillion as of January from P31.18 trillion in the same period a year ago. Month on month, however, this slipped by 0.9% from P33.96 trillion as of December.
Financial institutions’ resources include funds and assets such as deposits, capital, as well as bonds or debt securities.
Broken down, the banking system’s resources jumped by 9.1% to P27.95 trillion as of January from P25.62 trillion in the same period in 2024, BSP data showed.
Universal and commercial banks accounted for the bulk or 77.7% of total resources, rising by 8.9% year on year to P26.14 trillion from P24 trillion a year prior.
Resources held by thrift banks amounted to P1.16 trillion, up by 7.4% from P1.08 trillion in the year-ago period.
Digital banks’ resources surged by 44% to P133.3 billion as of January from P92.6 billion in the previous year. The BSP began consolidating data from digital banks starting March 2023.
Lastly, total resources of rural and cooperative banks stood at P527.1 billion, climbing by 18.1% from P446.5 billion.
Meanwhile, nonbanks’ resources went up by 2.6% to P5.7 trillion as of end-June 2024 from P5.56 trillion a year prior, based on the latest available data.
Nonbanks include investment houses, finance companies, security dealers, pawnshops and lending companies.
Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System and the Government Service Insurance System are also considered nonbank financial institutions.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the growth in the financial system’s total resources was mainly driven by increased lending.
“This largely reflects the faster growth in bank loans amid the total BSP rate cuts since August,” Mr. Ricafort said in a Viber message.
Bank lending jumped by 12.8% to P13.02 trillion in January, its fastest pace in over two years, earlier central bank data showed.
This was also in line with the cut in banks’ reserve requirements, Mr. Ricafort said.
The BSP in October began lowering banks’ reserve requirement ratios (RRR).
Big banks’ RRR was reduced by 250 basis points (bps). Rural and cooperative banks’ RRR was also slashed by 100 bps to 0%.
This “reduced intermediation costs, thereby increasing the demand for loans and allowed banks to use more funding for lending activities.”
“Faster loan demand enabled banks to sustain continued growth in deposits as part of the intermediation business that led to interest income,” Mr. Ricafort said.
“As a result, banks have become one of the most profitable industries that further boosted capital, on top of capital infusion from strategic foreign and local investors in recent years, thereby contributing also to banks’ faster asset growth.”
The net profit of the country’s banking industry rose by 9.76% year on year to P391.28 billion in 2024.
For the coming months, the BSP’s latest RRR cut could also boost the financial system’s total resources, Mr. Ricafort said.
By March 28, the RRR of universal and commercial banks and nonbank financial institutions with quasi-banking functions will be reduced further by 200 bps to 5% from the current 7%.
The RRR for digital banks will also be lowered by 150 bps to 2.5%, while the ratio for thrift lenders will be cut by 100 bps to 0%.