THE PHILIPPINE banking industry saw its net profits jump by 37.5% in 2022, thanks to higher interest income and trading gains, according to central bank data.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed banks’ cumulative net income rose by a third to P309.003 billion last year from P224.752 billion in 2021.   

Earnings growth was driven by a 12.8% year-on-year increase in net interest income to P746.461 billion.

Non-interest income grew by 24.1% to P257.555 billion from P207.587 billion in 2021.

Earnings from fees and commissions went up by an annual 13.6% to P121.851 billion, while trading income surged by 70.4% to P16.48 billion.

Meanwhile, lenders’ non-interest expenses edged higher by 8.2% year on year to P554.222 billion.

Non-interest expenses of banks include compensation and fringe benefits, taxes and licenses, fees and commissions, and administrative expenses.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the improved profitability of banks was due to the further reopening of the economy. This led to greater demand for loans, higher revenues and better asset quality for the banking industry, he added.

“Higher interest rate income may be partly due to higher US/global/local interest rates in the quest by US/global central banks to bring down elevated US/global/local inflation, as triggered by the Russia-Ukraine war since Feb. 24, 2022,” Mr. Ricafort added. 

Data showed the total operating income of Philippine banks grew by 15.5% to P1.004 trillion in 2022, from P869.425 billion in the prior year.

This as interest earnings rose by 16% to P901.841 billion, while expenses increased by 34.6% to P154.897 billion.

The industry’s losses on financial assets dropped by 10% to P87.873 billion as of end-December 2022 from P97.715 billion a year earlier.

Provisions for credit losses slipped by 1.8% to P104.445 billion, while bad debts written off plunged 68.7% to P2.36 billion last year.

The Philippine banking industry ended 2022 with its nonperforming loan (NPL) ratio falling to 3.17% from 3.97% at the end of 2021. This bad loan ratio was the lowest in 28 months.

Bad loans declined by 11.7% to P399.538 billion as of end-December from P452.453 billion a year earlier.

The loan portfolio of Philippine banks expanded by 10.7% to P12.61 trillion as of end-2022 from P11.39 trillion at the end-2021.

Meanwhile, deposit liabilities stood at P17.77 trillion as of end-December, rising by 9.4% year on year.

The local banking industry’s assets climbed by 10.6% to P23.034 trillion as of end-December from P20.83 trillion a year earlier. — Keisha B. Ta-asan