Bangko Sentral ng Pilipinas Governor Felipe Medalla said in a Bankers Association of the Philippines forum in October that banks had sustained their solid footing amid these challenges. This was characterized by adequate capital buffers, expanding assets, ample liquidity, growing deposits and lending recovery.“Our banks are growing in a healthy way without sacrificing the stability of the system and, at the same time, protecting depositors,” Medalla said in his speech.
By banking group, universal and commercial banks had the largest share of the total assets of the banking system at 94.0 percent , followed by thrift banks at 4.4 percent and rural and cooperative banks at 1.6 percent . The loan expansion largely came from the manufacturing, real estate, information and communication, wholesale and retail trade and construction sectors. Collectively, these sectors accounted for 48.7 percent of the banking system’s gross total loans.
The growth of total real estate loans scaled up by 7.2 percent to P2.505 trillion as of end-June 2022, surpassing the 6.1-percent growth recorded in June 2021. While the growth rate in this period was slower than the pre-pandemic average of 12.0 percent, it was slightly faster than the 6.5 percent average growth during the pandemic.
During the pandemic, the average growth of credit allocated to MSMEs dropped 10.3 percent, a turnaround from the 4.7-percent average growth rate before the pandemic. Long-term negotiable certificates of deposit accounted for a minimal 1.1 percent of the total. Savings deposits have consistently accounted for around half of total deposits in the past six years. The share of demand deposits and NOW accounts to total deposits, however, has been increasing the past three years.
Retained earnings and undivided profits held the largest share of total capital accounts at 49.5 percent and increased by 1.1 percent year on year to P1.275 trillion. This was followed by paid-up capital, which accounted for about 47.0 percent share and was the main driver of total capital growth with its 15.2 percent year-on-year expansion to P1.211 trillion as of the same reference period.
As of end-June 2022, the CAR of big banks stood at 16.0 percent on a solo basis and 16.5 percent on a consolidated basis, while the CET1 ratio hit 14.8 percent on a solo basis and 15.4 percent on a consolidated basis.Philippine banks’ net non-performing loans to capital ratio at 8.2 percent as of end-June 2022 showed a downtrend from 9.3 percent in December 2021 and 10.8 percent in June 2021 .