PHL financial system resources hit P35.17 trillion as of June

THE RESOURCES of the Philippine financial system climbed to P35.17 trillion as of end-June, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

The combined resources of banks and nonbank financial institutions grew by 7.45% year on year from the P32.73 trillion logged as of June 2024.

These resources include funds and assets such as deposits, capital, and bonds or debt securities.

Preliminary central bank data showed that banks’ resources stood at P29.18 trillion as of June, increasing by 7.95% from P27.03 trillion a year prior.

Total resources of universal and commercial banks rose by 7.15% year on year to P27.13 trillion at end-June from P25.32 trillion.

Thrift banks’ resources reached P1.37 trillion, increasing by 22.32% from P1.12 trillion in the same period in 2024.

Resources held by digital banks also jumped by 28.48% to P142.1 billion as of June from P110.6 billion a year prior.

Lastly, rural and cooperative banks’ resources amounted to P543.2 billion as of March, 13.43% higher than the P478.9 billion recorded at end-June 2024.

Meanwhile, nonbank financial institutions’ resources went up by 5.01% to P5.99 trillion as of end-March from P5.704 trillion as of June 2024.

Nonbanks include BSP-supervised investment houses, finance companies, security dealers, pawnshops and lending companies. Nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System and the Government Service Insurance System are also nonbank financial institutions.

Strong loan growth, particularly in the consumer sector, drove the continued expansion of the Philippine financial system’s resources, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP’s ongoing easing cycled helped drive increased demand for credit, he added, with cuts to banks’ reserve ratios also boosting their loanable funds.

“Continued profitability of banks, among the most profitable industries in the country for many years, added to banks’ capitalization and total resources. Continued growth in banks’ deposits, similar to gross domestic product growth, also fundamentally supported faster loan growth and also contributed to greater earnings, interest income, and net interest margins,” Mr. Ricafort said.

“For the coming months, relatively faster loan growth could be bolstered further by possible Federal reserve and BSP rate cuts for the coming months or years, [which] could support further growth in banks’ earnings, capital, and assets or resources.”

BSP Governor Eli M. Remolona, Jr. has said that they could deliver two more rate cuts before yearend, with the next reduction likely to happen as early as the Monetary Board’s Aug. 28 meeting.

After this month’s review, the Monetary Board’s remaining meetings for this year are scheduled for Oct. 9 and Dec. 11.

The BSP has lowered benchmark borrowing costs by a total of 50 basis points (bp) this year via two consecutive 25-bp cuts in April and June, with the policy rate now at 5.25%. This brought cumulative reductions since August 2024 to 125 bps.

Meanwhile, the Fed has kept its target rate at the 4.25%-4.5% range since December last year, with officials citing the need to assess the inflationary and economic impact of the Trump administration’s tariff policies. However, Fed policy makers said in their July meeting that they continue to see two rate cuts this year.

Recent data have bolstered bets of a September easing move by the US central bank. — Katherine K. Chan