Big banks mark banner year of profits

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BIG BANKS posted another banner year in 2018, with profits growing by a tenth at a time of higher borrowing costs and a weaker peso, latest central bank data showed.

Universal and commercial banks posted a cumulative P159.93-billion net income last year, according to preliminary data the Bangko Sentral ng Pilipinas (BSP) released on Friday, up 9.3% from the P146.33 billion booked in 2017 largely due to interest earnings.

Total operating income grew by 14.9% to P564.202 billion from P491.227 billion the past year.

Income from interest on loans and similar products surged by a fourth to P595.907 billion, partly offset by P162.88 billion in interest expenses.

This resulted in a net interest income of P431.782 billion, on the back of a 14.6% increase in loans. Outstanding credit stood at P9.018 trillion as end-December, versus P7.867 trillion in 2017.

Bigger borrowings came at a time of higher interest rates following the cumulative 175-basis-point increase in the key policy rate set by the BSP, which was meant to rein in surging inflation last year.

Non-interest income — drawn from dividends, fees and trading gains — went up 8.7% to P132.42 billion year-on-year. The increase was fueled partly by P38.558-billion trading income that was 6.9% more than the P36.053 billion a year ago. Income from fees and commissions grew by a tenth to P78.916 billion, while dividends steadied at P3.358 billion, data showed.

Non-interest expenses increased by 15.2% to P359.206 billion in 2018, largely as banks paid 27% more taxes and licensing fees at P37.508 billion. Fees and commission payments increased by 16.9% to P18.25 billion, while compensation and benefit packages for bank employees rose by a tenth to P124.759 billion.

There were 42 big banks operating in the Philippines as of end-September.

Across the entire Philippine banking system — which includes thrift, rural and cooperative banks — lenders made P178.835 billion, up 6.4% from the P168.075-billion profit in 2017.

Moody’s Investors Service kept its “stable” outlook for Philippine banks this year, noting that the sector will continue to enjoy a big capital base and upbeat loan growth despite rising borrowing costs.

Central bank officials also voiced confidence that local lenders will maintain their sound footing this year. — Melissa Luz T. Lopez