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THE ASSETS of the Philippine financial system increased to P35.17 trillion as of end-June, initial figures from the Bangko Sentral ng Pilipinas (BSP) indicated.
The total assets of banks and nonbank financial institutions advanced by 7.45% year on year from the P32.73 trillion recorded as of June 2024.
These assets encompass funds and holdings such as deposits, equity, and bonds or debt instruments.
Initial central bank figures revealed that banks’ assets amounted to P29.18 trillion as of June, rising by 7.95% from P27.03 trillion a year earlier.
Total assets of universal and commercial banks escalated by 7.15% year on year to P27.13 trillion at end-June from P25.32 trillion.
Thrift banks’ assets reached P1.37 trillion, an increase of 22.32% from P1.12 trillion during the same timeframe in 2024.
Assets held by digital banks also surged by 28.48% to P142.1 billion as of June from P110.6 billion a year earlier.
Finally, rural and cooperative banks’ assets totaled P543.2 billion as of March, 13.43% above the P478.9 billion recorded at end-June 2024.
Concurrently, nonbank financial institutions’ assets rose by 5.01% to P5.99 trillion as of end-March from P5.704 trillion as of June 2024.
Nonbanks encompass BSP-supervised investment firms, finance organizations, securities traders, pawnshops, and lending agencies. Nonstock savings and loan associations, credit card firms, private insurance companies, the Social Security System, and the Government Service Insurance System also classify as nonbank financial entities.
Robust loan expansion, particularly within the consumer segment, propelled the continued growth of the Philippine financial system’s assets, stated Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber communication.
The BSP’s ongoing easing cycle contributed to heightened demand for credit, he noted, with reductions in banks’ reserve ratios further augmenting their loanable resources.
“Ongoing profitability of banks, among the most lucrative sectors in the country for many years, enhanced banks’ capital and overall assets. Continuous growth in banks’ deposits, akin to gross domestic product progress, fundamentally supported accelerated loan growth, contributing to improved revenues, interest income, and net interest rates,” Mr. Ricafort added.
“In the months ahead, relatively faster loan growth could be further supported by potential Federal Reserve and BSP rate reductions in the coming months or years, potentially fostering additional growth in banks’ earnings, capital, and assets or resources.”
BSP Governor Eli M. Remolona, Jr. indicated that they could implement two more rate cuts before the year’s end, with the next decrease likely to occur as early as the Monetary Board’s meeting on Aug. 28.
Following this month’s review, the remaining meetings of the Monetary Board for this year are scheduled for Oct. 9 and Dec. 11.
The BSP has decreased benchmark borrowing rates by a total of 50 basis points (bp) this year through two successive 25-bp reductions in April and June, leaving the policy rate at 5.25%. This has led to cumulative declines since August 2024 totaling 125 bps.
Meanwhile, the Fed has maintained its target rate within the 4.25%-4.5% range since December last year, with officials underscoring the need to evaluate the inflationary and economic effects of the Trump administration’s tariff policies. However, Fed policymakers indicated in their July meeting that they still anticipate two rate cuts this year.
Recent statistics have strengthened expectations for a September easing move by the US central bank. — Katherine K. Chan
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