REUTERS

THE PHILIPPINE banking industry’s total assets rose by 6.4% year on year as of end-May, driven by higher loans, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Banks’ combined assets increased to P27.26 trillion as of May from P25.62 trillion in the same period a year ago.

Month on month, total assets edged up by 1.4% from P26.89 trillion as of end-April.

Banks’ assets are mainly supported by deposits, loans, and investments. These include cash and due from banks as well as interbank loans receivable (IBL) and reverse repurchase (RRP), net of allowances for credit losses.

The banking sector’s total net loan portfolio inclusive of IBL and RRP climbed by 12.7% to P15.12 trillion as of May from P13.42 trillion in the same period a year ago.

Net investments, or financial assets and equity investments in subsidiaries, increased by 6.5% to P7.96 trillion in the period from P7.47 trillion a year prior.

Net real and other properties acquired jumped by 12% year on year to P121.06 billion from P108.19 billion in the same period in 2024.

Banks’ other assets rose by 7.6% to P2.08 trillion from P1.93 trillion.

On the other hand, cash and due from banks fell by 26.4% to P1.98 trillion at end-May from P2.69 trillion a year earlier.

Meanwhile, the total liabilities of the banking system went up by 5.7% to P23.79 trillion as of May from P22.5 trillion in the comparable year-ago period.

The majority of banks’ liabilities were deposits, which grew by 4.97% to P20.06 trillion in the period from P19.11 trillion a year prior.

Peso-denominated deposits stood at 16.59 trillion, while foreign currency deposits were at P3.45 trillion.

“The continued growth in banks’ assets largely brought about and reflected by the sustained double-digit growth in loans and continued growth in bank deposits, both of which were faster than overall economic growth,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The BSP’s cumulative rate cuts since last year have supported demand for credit, he said.

The latest data from the BSP showed outstanding loans of universal and commercial banks increased by 11.3% year on year to P13.37 trillion as of May.

The Monetary Board has brought down benchmark interest rates by a cumulative 125 basis points (bps) since it started its easing cycle in August last year, with its latest move being a 25-bp reduction on June 19 that brought the policy rate to 5.25%.

“The continued growth in banks’ total assets also reflects continued growth in banks’ earnings as one of the most profitable industries in the country,” Mr. Ricafort added.

The banking industry’s combined earnings jumped 10.6% year on year to P101.9 billion in the first quarter, latest BSP data showed.

“For the coming months, possible further cuts in Federal Reserve rates that could be matched locally would help support future loan growth, as well as gains in bonds and investment securities of banks that would help increase trading gains,” Mr. Ricafort said.

Earlier this month, BSP Governor Eli M. Remolona, Jr. has said there is room for two more rate cuts this year amid easing inflation and weak economic growth.

Meanwhile, only “a couple” of officials at the Fed’s June 17-18 meeting said they felt interest rates could be reduced as soon as this month, with most policymakers remaining worried about the inflationary pressure they expect to come from President Donald J. Trump’s use of tariffs to reshape global trade, Reuters reported. — Luisa Maria Jacinta C. Jocson

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