The Philippine financial system’s growth slowed in the first semester “amid structural shifts,” the central bank reported on Wednesday, also noting that financial inclusion remained a challenge in terms of services.
Total resources of the country’s financial system reached P11.2 trillion as of end-June this year, the Bangko Sentral ng Pilipinas (BSP) said, up 9 percent from P10.28 trillion a year earlier.
The growth, however, was down from the 19.3 percent recorded in the first half of 2014. Still, the BSP said the system remained “in a position of strength … amid structural shifts in the global and domestic financial landscape.”
“Notwithstanding the sustained positive performance of the financial system, the BSP continues to closely monitor potential pressure points. This is in line with the BSP’s objective of promoting greater financial stability,” it said.
In particular, the central bank noted that assets had shifted and reflected risk-taking activity, pointing out that investment portfolios and loan portfolios had expanded by 13.3 percent to P2.39 trillion and 12.9 percent to P5.89 trillion, respectively, during the period.
Cash and due from banks— comprising cash on hand, checks and other cash items, items/transactions due the BSP and due from other banks—contracted by 2.5 percent to P2.35 trillion.
While noting a moderation in credit allocation, particularly with the real estate sector, the central bank said it remained “proactive in its surveillance and use of macroprudential tools to mitigate the buildup of systemic risks.”
Funding profiles, meanwhile, remained stable with retail and domestic-oriented deposit liabilities still the main source of funds.
Total deposit liabilities grew by 9 percent to P8.61 trillion as of end-June, described as “modest compared to the 18.3 percent growth recorded in 2013 on account of more alternative investment products like insurance variables in the market with more competitive rates as compared to deposit interest rate.”
The more upbeat stance toward loan and investment portfolio expansions, the BSP noted, proved beneficial as net profit grew by 8.1 percent to P68.9 billion year-on-year.
“This was supported by strong expansions in interest-based revenues (7.8 percent) and non-interest based income (11.0 percent). Trading income, in particular, registered a hefty growth of 35.9 percent on favorable market sentiment during the first semester of 2015,” it added.
The central bank also noted continued challenges given the Philippines’ archipelagic nature and again stressed its financial inclusion agenda by claiming reforms in the provision of new financial products and services in the countryside.
It reported that there were 638 operating banks with 9,890 branches as of the end of the first semester, of which only 268 were offering various e-banking services such as electronic wallets, cash/remittance products, internet banking, phone banking, mobile banking and hybrid mobile/internet via BancNet-MegaLink switch banking services.