The Philippine banking sector is in good shape as reflected by latest asset quality indicators, the Department of Finance, said.
“The banking system is growing faster than the economy, exceeding the nominal gross domestic product (GDP) growth of 5 percent,” the department said in its latest Economic Bulletin.
Citing preliminary data from the Bangko Sentral ng Pilipinas, the department said the banking system’s total assets were continuing an upward growth trend, rising by 8.21 percent to P12.085 trillion as of end-2015.
Deposits rose by 8.29 percent to P9.231 trillion while year-end net interest income hit P351.84 billion, growing by 9.46 percent from the previous year.
“The increase in deposits, total assets, and interest income, reflect that the country’s banking sector is in good shape,” the Finance department said.
Nonperforming loans (NPL), meanwhile, slightly increased by 1.46 percent to P136 billion, while total loans rose by 11.96 percent to P6.529 trillion.
Still, gross NPL ratio improved to 2.15 percent from 2.40 in 2014.
“The NPL is accompanied by a decrease in the gross NPL ratio which signifies precautionary measures taken by banks to ensure good quality loans,” the Finance department noted.
The loan to deposit ratio hit 70.74 percent, a 2.31 percentage point rise from 2014 but lower than the peak 2012 level of 73.49 percent, it added.
“This reflects better utilization of funds and more economically viable activities while maintaining sufficient buffer,” the Finance department said.
Banks’ real and other properties acquired, meanwhile, totaled P103.9 billion, down an annual 6 percent.
The lenders’ return on assets was 1.17 percent while return on equity (ROE) was 9.48 percent last year, following a downward trend.
The ROE net of GDP price deflator was 10.03 percent in 2015, higher than 9.58 percent in 2014, which the department said “implies stronger financial position despite lower lending spreads.”
In addition, it noted that the industry’s risk-based capital adequacy ratio for the past three years remained significantly greater than the 10 percent minimum imposed by the central bank on universal and commercial banks.
“The presence of adequate capital to cover for both credit and market risk will aid in withstanding volatilities caused by the financial market,” the Finance department said.