GROWTH IN ASSETS of the Philippines’ biggest banks continued to be robust last quarter, with loan expansion showing no signs of slowing and asset quality still way above regulatory minimum levels.

In the third quarter edition of BusinessWorld’s Quarterly Banking Report, combined assets of universal and commercial banks (U/KBs) operating in the country grew 14.12% to P14.33 trillion from the P12.56 trillion recorded in 2016’s comparable three months.

The asset growth pace clocked in the July-September period was faster than the 13.93% year-on-year increase in the second quarter of this year and quicker than the 6.9% expansion of the country’s gross domestic product in the third quarter.

Bank loans, which comprise around half of the big banks’ assets, totaled P7.47 trillion, 20.31% more than the P6.21 trillion in the third quarter of 2016.

In terms of profitability, U/KBs’ median return on equity (RoE) improved to 4.73% in the third quarter of this year from 4.70% in the second quarter. RoE — the ratio of net profit to average capital — measures the amount that shareholders make on every peso invested in a company.

In terms of assets, BDO Unibank, Inc. (BDO) remained at the top, followed by Metropolitan Bank & Trust Co. (Metrobank) and the Bank of the Philippine Islands (BPI). They were also the banks that issued the most loans during the period, also in that order.

Among banks with assets worth at least P100 billion, Asia United Bank posted the fastest growth in assets in the third quarter at 25.8%.

The same three months saw Security Bank Corp. as the most aggressive lender, with a year-on-year growth of 38%, followed by Citibank NA and China Banking Corp.

In terms of deposits, BDO had the most money, followed by BPI and Metrobank.

In terms of growth, however, Security Bank has been growing its deposit base the fastest with a 44% year-on-year clip, followed by AUB and China Bank.

ASSET QUALITY
Meanwhile, banks’ ability to absorb losses eased a little as their median capital adequacy ratio — a measure of solvency — dipped to 17.63% from the 18.45% seen in the preceding three months.

Nevertheless, the latest ratio remains well above the regulatory minimum of 10% set by the Bangko Sentral ng Pilipinas as well as the international standard of eight percent.

The non-performing loans (NPL) ratio of the biggest banks improved to 1.61% in the third quarter compared to the second quarter’s 1.74%.

Meanwhile, banks’ non-performing assets ratio — the combination of non-performing loans, foreclosed properties and total assets — was slightly up to 0.59% from 0.58% in the second quarter, but still lower than the past year’s 0.67%.

As percent of total assets, foreclosed properties fell to 0.35% from the second quarter’s 0.36% and past year’s 0.43%.

The banks’ coverage ratio — the ratio of the total loan loss reserves to gross NPL — stood at 136.05% last quarter. This was slightly lower than 137.69% in the preceding three months but still more than enough to cover the entire value of bad loans held by big banks. Loan loss reserves totaled P143.34 billion, 7.41% more than a year ago. — Lourdes O. Pilar

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