Big banks and consumer lending grow on improving economic conditions

By on June 13, 2022 0
UNIVERSAL and commercial banks continued to expand amid improving economic conditions, the head of Bangko Sentral ng Pilipinas said on Monday. — BW FILE PHOTO

Universal and Commercial Banks of the PHILIPPINES (U/KB) continued to grow as economic conditions and credit activity improved amid the current health crisis, Bangko Sentral ng Pilipinas (BSP) said.

“U/KB key performance indicators showed a steady increase in assets, loans and deposits, and sustained profitability with ample reserves for credit losses, suffiliquidity and capital buffers,” BSP Governor Benjamin E. Diokno said during a brieIfMonday.

“The sector remains the main driver of the Philippine banking system as it holds the lion’s share of system lending at 93.6%, investment at 96.3% and depository activity at 94.1% at the end of April 2022. “, he added.

Big banks reported 26.7% year-on-year growth in net incomeIft to 61.4 billion pula in March 2022, as economic conditions and credit activity improved, the BSP said.

Their assets rose 8.2% to reach 19.45 trillion pesos at the end of April, against 17.98 trillion pesos posted a year earlier. This was mainly due to deposits, which increased by 8.7% to reach 15.180 billion pesos during the same period.

U/KB’s total loan portfolio grew by 9.8% year-on-year to P10.7 trillion at the end of April. These loans have been extended to the real estate, wholesale and retail trade, and manufacturing sectors.

Loans to micro, small and medium-sized enterprises (MSMEs) amounted to 334.8 billion pesos in April, while loans to households, including residential real estate, reached 1.7 trillion pesos.

“With a strong and solid performance, U/KBs provided credit support to key segments of the economy,” Diokno said.

“The latest data on the alternative meeting of reserve requirements shows that the industry allocated an average of 186.6 billion pesos in loans to MSMEs, or about 12% of total reserve requirements for the reserve week ending May 24. 2022. This is a substantial amount. increase from the 7.4 billion pesos of loans to MSMEs, a share of about 0.6%, reported in April 2020,” he added.

Loan quality also showed signs of recovery, with their non-performing loan (NPL) ratio – the share of degraded loans in the total loan portfolio – falling to 3.6% at the end of April, from 3.7 % in March and the 3.9% observed at the end of 2021. .

On the other hand, the industry’s NPL coverage ratio rose to 95.2% in April from 87.7% in the same month last year.

“The full implementation of the law on the strategic transfer of financial institutions and the extension of effThe activity of some of the BSP’s credit-related relief measures is seen as supporting the continued growth of U/KB loans,” the central bank said in a statement.

Republic Act 11523, also known as the Financial Institutions Strategic Transfer Act, allows banks to sell their non-performing assets to specialized asset management firms. The law took thffetc. in February 2021.

“Furthermore, U/KB continued to be well capitalized. At the end of March 2022, they posted risk-based capital adequacy ratios of 16.2% and 16.8%, respectively, on an individual and consolidated basis. This is well above the minimum threshold of 10% set by BSP, and 8% by the Bank for International Settlements,” Diokno said.

The sector also posted a liquidity coverage ratio of 200.3% on an individual basis at the end of February 2022, well above the minimum requirement of 100%.

Mr. Diokno said that the BSP’s policy priorities for the banking sector for the next two years are “based on good corporate governance of banks, effeffective risk management and a solid financial position.

These priorities include improving banks’ operational resilience, continue to provide a platform that enables technological innovations to flsupply while ensuring consumer protection and sustainability.

“BSP’s promotion of digital transformation and sustainable development Ifnance strengthens BSP’s momentum for financial inclusion. This fundamentally involves increasing the access of the unbanked and underserved to financial products and services, while protecting vulnerable segments of society,” the central bank chief said.

GROWTH IN CONSUMER LOANS
Meanwhile, consumer loans granted by universal, commercial and savings banks increased by 0.7% year-on-year to reach 1,970 billion pesos at the end of March after four consecutive quarters of contraction in 2021.

“This growth is largely coming from residential real estate loans, credit card receivables and general purpose consumer loans based on salaries. These outpaced declines in auto and other consumer loans,” Diokno said.

“The improved outlook is due to expectations of the availability of more jobs and permanent jobs, additional and high incomes, and effeffective government policies and programs, such as the relaxation of quarantine restrictions, the availability and deployment of vaccines, and the provision of Iffinancial aid,” he added.

Residential real estate loans accounted for the largest share of consumer loans at 44.6% in March. This is followed by credit card receivables at 22.7% and car loans at 22.6%. — KB Ta-asan