PH financial system expands 12% in 2014
PH financial system expands 12% in 2014
Loans, portfolio investments, along with stable funding from domestic and retail deposits buoy the system for the previous year


MANILA, Philippines – The Philippine financial system expanded by 12% in 2014, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday, May 5.

The system was lifted by double-digit growth in loans (19.5%) and portfolio investments (13.3%). Stable funding from domestic (98.8%) and retail deposits similarly grew by 12.1% year-on-year.

The quality of banks’ credit underwriting standards and commitment to asset cleanup are still on point, as gross non-performing loan (NPL) ratio further eased to 2.3% from 2.8% last year, or 1.7 percentage points lower from the pre-1997 Asian financial crisis level of around 4% and a significant turnaround from the peak of 16% during the oil crisis in 2001.

Loan loss coverage ratios for NPLs and non-performing assets (NPA) were kept at 119.8% and 77% respectively. There was also ample liquidity in the system for further expansionary credit, as liquid assets-to-deposit ratio rose to 55.6% from 59.5% in 2014.

Banks’ capitalization remained strong as capital adequacy ratio (CAR) stood at 15.4% on a solo basis and 16.2% on a consolidated basis.

Apart from stronger balance sheets, banks reported a positive bottom line as net profit, albeit growth dipped by 6.9%, reached P135 billion ($3.03 billion) from P144.9 billion ($3.25 billion) in 2013, driven by the small yet significant shift in non-interest based revenues, particularly of trading income. 

Domestic banks are also intrinsically stronger and more profitable compared to their foreign counterparts, BSP said.

By end-2014, the country has 648 operating banks; 9,700 bank branches; 15,695 ATMs; 517 microfinance banking offices; and 271 banks with e-banking services (Internet, mobile, phone, e-wallet, and remittance cards).

Positive outlook

The BSP said it continues to widen financial access points under a defined financial inclusion strategy.

The central bank cited international credit watchers and market analysts which consider the Philippine banking system as one of the strongest in the region, being the only banking system out of the 69 rated banking systems in the world that received a “positive” outlook from Moody’s in 2014 (two times in a row). 

The country’s financial freedom score also improved by 10 notches on the continuing modernization and liberalization of the banking system, with the removal of limits to foreign bank entry in 2014 against the backdrop of an efficient regulatory environment.

The BSP continues to closely monitor potential pressure points, notwithstanding the solid performance of the financial system in 2014. –


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