The total assets of the PHL banks increased by 12.4% at the end of May

By means of Luisa Maria Jacinta C. Jocson, News reporter

THE PHILIPPINE BANKING SYSTEMDustry’s total assets rose 12.4% year-on-year at the end of May, data from the Bangko Sentral ng Pilipinas (BSP) showed.

According to preliminary data, the banks’ combined assets rose to P25.62 trillion from P22.79 trillion a year ago.

Month-on-month, total assets rose 0.5% from P25.48 trillion at the end of April.

Banks’ assets are mainly supported by deposits, loans and investments. These include cash and receivables from banks, as well as interbank loans receivable (ILL) and reverse repurchase (RRP), net of provisions for credit losses.

The banking sector’s total loan portfolio, including IBL and RRP, rose 10.4% to P13.42 trillion at the end of May, compared to P12.16 trillion the year before.

Net investment, or financial assets and equity investments in subsidiaries, rose 11.3% to P7.47 trillion from P6.71 trillion a year ago.

Banks’ cash and debt stood at P2.69 trillion at the end of May, up 2% from P2.64 trillion a year earlier.

Net properties and other properties acquired rose 7.2% to P108.19 billion from P100.93 billion a year ago.

Banks’ other assets rose 63.4% to P1.93 trillion from P1.18 trillion a year earlier.

Meanwhile, total liabilities of the banking system rose 12.8% to P22.5 trillion from P19.95 trillion in the same period a year ago.

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the higher asset levels at the end of May showed the strong growth of the banking sector.

“This is again more than twice faster than gross domestic product (GDP) growth, largely attributed to continued double-digit growth in the net income of banks, which are considered one of the most profitable industries in the country,” he said in a Viber message. .

Previous central bank data showed that the banking sector’s net income rose 2.95% to P92.107 billion at the end of March.

This is also in line with faster credit growth in recent months, Mr Ricafort said.

Bank lending grew 9.6% to P11.91 trillion at the end of April, the latest data from the BSP showed.

Mr. Ricafort also mentioned the continued recovery of the economy and business activities following the coronavirus disease 2019 (COVID-19) pandemic.

He said possible interest rate cuts in coming months would “further boost banks’ trading profits and other investment income”.

BSP Governor Eli M. Remolona Jr. has said the central bank is on track to start cutting rates in August, for a total of 50 basis points (bps) of rate cuts by 2024.

The Monetary Board will hold its next policy review on August 15.

If the BSP starts easing policy in August, it would be the first rate cut in more than three years, or since the central bank last implemented a 25 basis point rate cut in November 2020 amid the COVID-19 pandemic.

Market players are also anticipating the possibility that the US Federal Reserve will cut interest rates as early as the third quarter.

US Federal Reserve Chairman Jerome H. Powell told lawmakers that “more good data” would strengthen the case for rate cuts. The probability of a rate cut in September is around 75%, with the next signal coming later in the day from data expected to show a easing in US yields.FReuters reports this.