THE NET EARNINGS of the banking industry climbed by 43% as of September, driven by higher trading gains and interest income, according to central bank data.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed banks’ cumulative net income rose to P243.066 billion in the January to September period from P169.089 billion last year.

The Philippine banking industry also recorded lower bad debts written off at P2.3 billion in the nine months ended September, down by 64% from the P6.4 billion seen at end-September 2021.

As of September, banks’ net interest income increased by 10.2% to P542.499 billion from the P491.883 billion last year. 

Non-interest income also grew by 24.9% to P207.724 billion from P166.349 in the same period in 2021.

“The stronger banking industry performance may be largely attributed to the further reopening of the economy towards greater normalcy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Metro Manila and some provinces have been under the most lenient alert level since March. This has enabled businesses to operate at full capacity.

“(This is) also amid lower base/denominator versus a year ago amid some pockets of lockdowns last year,” he added.

Data showed the total operating income of Philippine banks grew by 14% to P750.225 billion from P658.233 billion in the comparable year-ago period.

The industry’s trading income more than doubled (177%) to P17.09 billion in the first nine months from P6.16 billion.

Non-interest expenses of banks, including compensation and fringe benefits, taxes and licenses, fees and commissions, and administrative expenses increased by 6.4% to P404.622 billion from P379.971 billion a year prior.

Meanwhile, bad loans held by banks declined for a seventh straight month in September, bringing the nonperforming loan (NPL) to its lowest in 25 months or since 2.84% in August 2020.   

Based on latest BSP data, Philippine banks’ NPL ratio eased to 3.43% in September from 3.53% in August. It was also lower than the 4.44% in September 2021.

Soured loans fell by 14.6% year on year to P415.225 billion in September from P486.362 in the same month last year. This was also 0.6% lower than the P418 billion seen in August.

Mr. Ricafort said robust lending growth could benefit banks’ asset quality. Lenders would also have better credit fundamentals as borrowers now have a greater capacity to pay amid higher sales or incomes, he said. — K.B. Ta-asan