PH financial system resources rose by 11%

The Philippines’ financial system resources continued to grow in April as banks continued to fuel growth through lending and higher deposits despite market volatility and economic uncertainty stemming from the conflict in the Middle East.

Excluding the resources of the central bank, total funds and assets held by the local financial sector went up by an annualized rate of 11 percent to P37.3 trillion, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The amount was relatively unchanged from March.

These resources represent cash and assets like credit, deposits, capital and bonds that financial entities can use to meet their funding needs.

Also, the amount includes capital that regulated institutions set aside as rainy-day funds to cover potential losses and depreciation.

The sustained growth, in turn, would continue to support the financing requirements of the country’s growing economy, which is currently facing challenges emanating from the Middle East conflict.

The BSP has said banks and nonbank financial institutions were well-positioned when the war erupted earlier this year.

John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the growth seen in April indicated that the financial system “remains broadly resilient despite a challenging macroeconomic environment.”

“The relatively flat month-on-month movement suggests a period of consolidation as financial institutions become more cautious amid elevated inflation, slower growth, and heightened uncertainty,” Rivera said.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the expansion reflected “healthy liquidity growth, sustained bank lending, and deeper financial market participation.”

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“That said, the flat month-on-month reading suggests we’re seeing a natural pause, with tighter financial conditions prompting both banks and borrowers to be more measured,” Ravelas added.

Figures showed banks continued to corner the bulk of the total resources of the domestic financial system, holding 83 percent of the pile. Total funds and assets held by banks amounted to P31 trillion as of April, marking a 12-percent growth.

Lastly, resources of nonbank financial institutions like investment houses, pawnshops, insurance companies and state-run pension funds went up by 5 percent to P6.3 trillion.

“I expect total resources to continue growing but at a more moderate pace,” Rivera said. “The story here is not the size of the financial system but whether it can continue supporting economic activity while maintaining stability and manag(ing) risks effectively.”