PH financial resources reach all-time high
The total funds and assets held by Philippine financial institutions climbed to a fresh record high in August, climbing back to the P38-trillion level as lenders continued to expand credit and attract deposits despite challenges confronting the economy.
Excluding the funds and assets of the central bank, the total resources of the financial system rose 11 percent from a year earlier to P38.6 trillion, data from the Bangko Sentral ng Pilipinas (BSP) showed. The amount was the highest on record, dating back to 1970.
The total reflects the financial sector’s available resources, including cash, loans, deposits, capital and investment securities, as well as reserves that regulated institutions maintain to absorb potential losses and safeguard financial stability.
The strong expansion suggests that financial institutions remain well-positioned to meet the needs of the growing economy, which is grappling with elevated inflation and lingering effects of a recent corruption scandal that had paralyzed government spending.
“Growth was driven mainly by solid loan expansion, rising deposits, healthy bank earnings and continued balance sheet growth among major banks,” said Jonathan Ravelas, senior adviser at Reyes Tacandong & Co.
“Moving forward, resource growth will hinge on credit demand, interest rates, inflation and the strength of economic activity,” he added.
Figures showed banks continued to corner the bulk of the total resources of the domestic financial system, holding over 83 percent of the pile. Total funds and assets held by banks amounted to P32.2 trillion as of August, up by 12.5 percent.
Broken down, the resources of big lenders went up by nearly 12 percent to P29.8 trillion, while thrift banks posted a growth rate of 12 percent to P1.5 trillion.
Digital banks saw their resources surge by over 51 percent to P225.2 billion. Funds and assets of rural and cooperative banks grew by 47 percent to P623.9 billion.
Lastly, resources of nonbank financial institutions like investment houses, pawnshops, insurance companies and state-run pension funds edged up by 5 percent to P6.4 trillion.
Regulators have said the war in the Middle East presents a meaningful but manageable risk to the Philippines’ financial stability, noting that the banking system has limited exposure to Gulf nations even as some Philippine companies could face mounting pressure from the economic fallout.
The main transmission channels, they said, run through imported inflation, a wider current account deficit and tighter external financing conditions, which could weigh on growth and increase credit risks if sustained.
