MANILA: Total resources of banks in the Philippines strengthened further, booking a double-digit growth in end-November amid external shocks brought about by the normalization of the near-zero interest rates in the US as well as the economic slowdown in China.
Data released by the Bangko Sentral ng Pilipinas (BSP) showed total resources of the Philippine financial system grew 10.5 percent to P11.9 trillion in end November last year from P10.7 trillion in end-November 2014.
Big banks or universal and commercial banks continued to account for 90 percent of the total resources of the banking system. As a percent of gross domestic product (GDP), the country’s banking resources stood at 90.6 percent.
Bank deposits rose 8.5 percent to P7 trillion in end-November last year from P6.5 trillion in end-November 2014 as savings deposits increased 10.4 percent while demand deposits jumped 15 percent in end-November. Likewise, foreign currency deposits owned by residents surged 12.7 percent to P1.5 trillion year-on-year.
On the other hand, time deposits declined by one percent in the first 11 months of last year. The continued rise in resources including deposits, profits, and retained earnings indicate banks have the ability to service funding needs of corporate and household clients.
At the same time, this shows banks have enough buffer against any external shocks. The BSP said the country’s banking system maintains its strong position as it continues to support economic growth. The country’s GDP growth accelerated to 6.3 percent in the fourth quarter of last year from the revised 6.1 percent in the third quarter amid the improving government spending and robust domestic demand.
However, weak global demand and lack of government spending pulled down the GDP growth to 5.8 percent last year from 6.1 percent in 2014. This was way below the seven-to eight-percent growth target penned by economic managers.
BSP Governor Amando Tetangco Jr. earlier said the Philippine banking sector was again a source of strength and stability for the country’s economy for 2015.
“Sound, stable and liquid, our banks continued to be a major source of funding for our productive sectors and thereby helped generate jobs that support inclusive growth across the country,” Tetangco said in a speech during the Annual Reception for the Banking Community held late last month. According to him, the combined resources of the banking industry are sufficient to finance the requirements of the real economy.
