The Philippine banking system generated a lower net income in the first nine months of the year as lenders continue to set aside provisions for bad loans in the period, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.
Preliminary data from the central bank showed that the industry’s P126.78-billion net profit from January to September was 25.92 percent smaller than the P171.16 billion in the same period in 2019.
Total operating income leaped by 12.67 percent to P660.71 billion in the nine months ending September from P586.41 billion a year ago, but losses swelled by 312.89 percent to P143.81 billion from P34.83 billion year-on-year.
Banks’ provision for credit losses on loans and other financial assets widened by 292.43 percent to P143.79 billion in the first three quarters from P36.64 billion a year earlier.
Some of the country’s biggest lenders, including the Rizal Commercial Banking Corp., Metropolitan Bank and Trust Co., Union Bank of the Philippines and Bank of the Philippine Islands, traced their lower net earnings to wide loan loss provisions.
Lenders wrote off P2.79 billion in bad debts in the nine-month period, a 0.71-percent reduction from the year-earlier P2.81 billion.
Earlier, central bank data also showed that the banking system’s gross nonperforming loans surged by 60.22 percent year-on-year to P364.67 billion in January to September from P227.60 billion.
The BSP has said it issued timely, time-bound and crucial monetary and regulatory relief measures to help its supervised financial institutions, or BSFIs, cope with the coronavirus disease 2019 (Covid-19) crisis and to continue supporting households and business enterprises.
“These measures provide incentives for BSFIs to extend financial relief to their borrowers, make credit available to consumers and particularly micro, small and medium enterprises, promote continued access to credit/financial services, support continued delivery of financial services to enable consumers to complete financial transactions during the enhanced community quarantine period, and support the level of domestic liquidity,” it added.
Moving forward, the BSP said the pandemic required constant surveillance and continued enhancements of its regulatory and supervisory framework to be at pace with the fast-evolving market landscape and its potential vulnerabilities.
“Over the short run, there is a need to closely and frequently monitor risk dynamics in a holistic manner to capture the true health of financial institutions following the adoption of relief measure,” it added.