The country’s financial system resources is poised to hit or even exceed the P32-trillion mark this year given the positive outlook for the banking sector amid sustained economic growth and the anticipated reduction in the central bank’s interest rates in the second half of 2024.
In a report, the Bangko Sentral ng Pilipinas (BSP) said the Philippine banking system “continued to improve, particularly in terms of resources and asset quality” on the back of sustained gross domestic product (GDP) expansion in the fourth quarter 2023.
Banks represent the bulk of the financial sector, with the big banks accounting for about 93.8 percent of the total banking system’s resources. The remaining 6.2 percent is composed of the following: thrift banks with 4.2 percent; rural and cooperative banks with 1.6 percent; and digital banks with 0.4 percent.
Based on BSP data as of January this year, the country’s total financial system resources increased to P30.787 trillion, up 8.8 percent compared to same time last year of P28.302 trillion.
Financial resources are held by banks and non-banking financial institutions (NBFIs) as funds and assets. These are boosted by deposits, capital, and bonds or debt securities.
The banking sector accounted for P25.59 trillion of total resources, up by 10 percent from P23.245 trillion in January 2023.
By banking group, the 44 big banks or the universal and commercial banks had total resources P24.005 trillion during the month which was 10 percent higher than the same period last year of P21.821 trillion.
Meanwhile, the 42 thrift banks supervised by the BSP accounted for P1.077 trillion of the total, 5.48 percent more compared to P1.021 trillion last year.
The 366 rural banks and 22 cooperative banks held P415 billion of total resources based on an end-June 2023 data, from P403 billion same time in 2022.
Digital banks -- and there are only six BSP-licensed digital banks -- started operations only in 2022 and do not as yet show complete resources.
Similar with rural and cooperative banks, the BSP also takes its time in reporting NBFIs’ resources. As of end-June 2023, NBFIs accounted for P5.197 trillion of total resources, up 2.77 percent versus P5.057 trillion in 2022.
NBFIs are investment houses, finance companies, investment companies, securities dealers/brokers, pawnshops and lending investors. Non Stocks Savings and Loan Associations (NSSLAs), credit card companies under BSP supervision, private insurance firms, Social Security System and the Government Service Insurance System are also classified as NBFIs.
As of February 2024, data from the BSP showed there are 1,320 NBFIs without quasi-banking function. These are investment firms, NSSLAs and pawnshops. Only five NBFIs have quasi-banking function which means they can borrow funds from 20 or more lenders. These include investment houses with trusts business, financing companies, among others.
Last year, the country’s total financial system resources reached P31.123 trillion. This was higher compared to 2022’s P28.864 trillion and P26.357 trillion in 2021.