PH banking system stable amid challenging global financial landscape
MANILA, Philippines – Amid the challenging global financial landscape, net income of the Philippines’ banking system was sustained at P134.6 billion ($2.86 billion) in 2015, due to tempered trading gains on the back of rising interest rates.
In 2014, Philippine banks reported a net income of P134.9 billion ($2.86 billion), data from Bangko Sentral ng Pilipinas (BSP) showed.
The central bank said funding remained largely sourced from retail and peso deposits of residents.
BSP said the banks' risk-taking activities and overall operations had manageable impact on capital and profitability.
The current capital adequacy ratio (CAR) at 14.9% on a solo basis of universal and commercial banks indicates enough capitalization, BSP said. CAR is a measure of a bank's capital.
Meanwhile, BSP data showed foreign currency deposit liabilities comprised 16.7 of total deposit liabilities.
This means banks were "generally compliant" with the required asset and liquid asset cover ratios of 100% and 30%, respectively, BSP said.
Entry of foreign banks
Foreign bank branches and subsidiaries (FBBs) similarly ended 2015 with improved solvency, asset quality, and liquidity.
Profitability was maintained on higher interest income, BSP said.
The 4 new FBBs brought in fresh funds to the Philippine banking system when they started operations in 2015.
Banks that entered the country in the past few months are Cathay United Bank in Taiwan, Industrial Bank of Korea in South Korea, Shinhan Bank in South Korea, and Sumitomo Mitsui Banking Corporation in Japan.
BSP said other non-bank financial institutions also exhibited prudence in their overall risk-taking activities and provided sufficient capital buffers for unforeseen shocks from their operating environment, like rising interest rates.
In particular, non-bank financial institutions with quasi-banking functions (or those that consist of investment houses and finance corporations) reported positive net income and sufficient capitalization, with borrowings mostly in the form of deposit substitutes.
In line with its effort to promote greater financial stability, the central bank said it continues to bolster the banking system's capabilities to address potential risks. — Rappler.com