Philippine Financial System Maintains Positive Performance in 1H 2015
Manila—(PHStocks)—The Philippine financial system, supported by the strong performance of the banking system which accounted for more than 80.8% thereof, remains in a position of strength in the first half of 2015 amid structural shifts in the global and domestic financial landscape.
Total resources expanded by 9% to PhP11.2 trillion. Assets shifted and reflected banks’ risk-taking activities to maximize returns following the double-digit expansions in the investment portfolio of 13.3% and loan portfolio of 12.9%, respectively, vis-à-vis the contraction in cash-and-due from banks of 2.5%. Despite the moderation in credit allocation particularly with the real estate sector, the Bangko Sentral ng Pilipinas (BSP) remains proactive in its surveillance and use of macroprudential tools to mitigate the buildup of systemic risks.
Funding profile remained stable with retail and domestic-oriented deposit liabilities continue to be the main source of funds. Total deposit liabilities posted a growth of 9% at end-June 2015. This is modest compared to the 18.3% growth recorded in 2013 on account of more alternative investment products like insurance variables in the market with more competitive rates as compared to deposit interest rate.
Banks’ more upbeat stance towards loan and investment portfolio expansions proved beneficial as net profit grew by 8.1% to PhP68.9 billion year-on-year. This was supported by strong expansions in interest-based revenues (7.8%) and non-interest based income (11%). Trading income, in particular, registered a hefty growth of 35.9% on favorable market sentiment during the first semester of 2015.
The country’s archipelagic landscape provides challenges and opportunities in the provision of much needed financial services particularly in remote rural areas. In response, the BSP continues to be responsive by building on its financial inclusion agenda through reforms in the provision of innovative financial products and services in the countryside. As of end-June 2015, there were 638 operating banks with 9,890 branches and 268 of these banks were offering various e-banking services such as electronic wallet, cash/remittance products, internet banking, phone banking, mobile banking and hybrid mobile/internet via BancNet-MegaLink switch banking service in the Philippines.
Notwithstanding the sustained positive performance of the financial system, the BSP continues to closely monitor potential pressure points. This is in line with the BSP’s objective of promoting greater financial stability.