PHL banks’ net profit up 4% as of June
THE PHILIPPINE banking industry’s combined net income rose by 4.08% year on year to P190.21 billion as of end-June amid higher net interest earnings, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The net profit of the banking system increased from P182.76 billion in the comparable year-ago period.
Banks’ net earnings also more than doubled (106.5%) from the P92.11 billion recorded at end-March.
Central bank data showed that the industry’s combined net interest income climbed by 15.5% year on year to P505.83 billion in the first semester from P437.84 billion amid elevated rates.
Broken down, lenders’ interest earnings jumped by 20% to P729.14 billion at end-June from P607.74 billion in the previous year.
Interest expenses stood at P222.69 billion in the period, higher by 31.3% from P169.66 billion a year prior.
Meanwhile, the banking sector’s non-interest income declined by 8.8% to P104.47 billion in the first half from P114.6 billion in the same period a year ago.
This was mainly due to a 66.93% decline in other income to P6.78 billion from P20.5 billion, which was largely driven by the foreign exchange loss of P7.99 billion recorded in the semester, a reversal of the P9.33-billion gain realized a year earlier.
Profits from the sale of other assets likewise dropped by 54.07% to P6.66 billion from P14.5 billion.
For their part, earnings from fees and commissions rose by 10.75% year on year to P77.07 billion from P69.59 billion, while trading income climbed by 38.12% to P13.94 billion from P10.02 billion.
On the other hand, the industry’s non-interest expenses went up by 10.2% to P341.22 billion from P309.73 billion.
Losses on financial assets widened by 28% to P44.9 billion in the first half from P35.09 billion in the year-ago period. Broken down, provisions for credit losses grew by 28.5% to P51.4 billion at end-June from P40 billion, while bad debts written off surged 398% to P1.46 billion from P292.62 million.
The increase in the Philippine banking sector’s net profit in the first semester was likely driven by the continued double-digit growth in lending, which boosted interest earnings, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“This is brought about by the continued recovery of the economy, with no more COVID restrictions for more than a year already, thereby leading to further recovery of many businesses and industries that translated to greater demand for loans and other banking products and services,” Mr. Ricafort said.
Outstanding loans of universal and commercial banks rose by 10.1% year on year to P12.09 trillion as of June from P10.99 trillion a year prior, BSP data showed.
Bank lending growth in June was steady from a month ago, which was the fastest since the 10.2% recorded in March 2023.
Mr. Ricafort said that easing global and local bond yields also “led to higher trading income for banks and would continue to lead to more gains amid possible US Federal Reserve and local policy rate cuts expected from 2024-2026.”
TOTAL ASSETS
Meanwhile, separate BSP data showed that the banking industry’s combined assets rose by 12.4% to P26.2 trillion at end-June from P23.3 trillion in the same period a year ago.
This also edged up by 2.3% from P25.62 trillion as of May.
Banks’ assets are mainly supported by deposits, loans, and investments. These include cash and due from banks as well as interbank loans receivable (IBL) and reverse repurchase (RRP), net of allowances for credit losses.
The banking sector’s total loan portfolio inclusive of IBL and RRP increased by 12.5% to P13.84 trillion from P12.3 trillion.
Net investments, or financial assets and equity investments in subsidiaries, stood at P7.53 trillion. This was up by 11.2% from P6.77 trillion as of end-June a year ago.
Cash and due from banks dropped by 4.2% to P2.75 trillion from P2.87 trillion.
Net real and other properties acquired went up by 6.9% to P109.4 billion from P102.3 billion year on year.
Meanwhile, the total liabilities of the banking system rose by 12.7% to P23.03 trillion at end-June from P20.43 trillion a year prior. — Luisa Maria Jacinta C. Jocson