Banks’ net profits up 17%

Banks reported combined net profits of P143.12 billion as of end-June this year, up by 16.67 percent from P122.67 billion same time in 2021.

The country’s banking system also posted lower bad debts written off of P1.81 billion in the first half, down by 63.32 percent compared to end-June 2021 of P4.94 billion, based on the latest Bangko Sentral ng Pilipinas (BSP) data. Writing off bad debts which are non-performing loans, clears banks’ balance sheets as these are considered uncollectable debts.

As of end-June, banks’ cumulative net interest income increased by 8.83 percent to P354.32 billion from P325.58 billion. Its non-interest income however fell by 7.26 percent to P117 billion from P126.16 billion last year.

Operating income, meantime, improved by 4.33 percent to P471.32 billion from P451.74 billion same time in 2021.

As of end-June, the industry’s non-interest expenses increased by 5.17 percent to P266.95 billion versus P253.82 billion last year.

The BSP is supervising 45 big banks as of end-June. They also monitor 43 thrift banks and 406 rural/cooperative banks.

While the country’s banks have relatively remained liquid and resilient all throughout the pandemic, the BSP has been paying closer watch on domestic systemically important banks or D-SIBs.

Banks considered as D-SIBs are those whose distress or disorderly failure would cause significant disruptions to the wider financial system and economy.

The BSP recently amended the existing rules on D-SIBs framework and that it will have a more frequent review of these “too big to fail” banks.

As D-SIBs, each big banks will be assessed using methodologies such as indicator-based measurement approach, bucketing approach and supervisory judgement.

Presently, under the current arrangement, the BSP is not publicly disclosing the identified D-SIBs.

BSP said previously that disclosure “may have legal implications” based on provisions in the BSP Charter or the New Central Bank Act, as amended.

The current arrangement also intends to minimize potential misinterpretation of the list as an endorsement of selected banks, said the BSP.

In the Philippines, financial groups with banks as parent companies or known as financial conglomerates include BDO Unibank Inc. of the SM Group, Bank of the Philippine Islands of the Ayala Group and the Ty family-controlled Metropolitan Bank & Trust Co. This list also include Lucio Tan Group’s Philippine National Bank, the Yuchengco Group’s Rizal Commercial Banking Corp., the Dy-owned Security Bank Corp. and the Aboitiz Group’s Union Bank of the Philippines.

Banking groups include China Banking Corp. which is a sister bank of BDO, Asia United Bank Corp., and the government-owned Land Bank of the Philippines. The San Miguel Group also has a banking unit, Bank of Commerce.