Banks’ trust assets grow 2.4% in Q3

December 26, 2018

Banks’ trusts business went up by 2.40 percent year-on-year to P2.470 trillion as of end-September from P2.412 trillion, based on Bangko Sentral ng Pilipinas (BSP) data.

The big banks accounted for P2.424 trillion while thrift banks contributed P45.255 billion. Both are higher compared to what was reported in 2017 of P2.368 trillion and P43.884 billion, respectively.

Financial assets accounted for the biggest share in total assets followed by deposits in banks.
Net financial assets slipped 0.79 percent to P1.242 trillion from P1.252 trillion while net loans also decreased by 5.40 percent to P41.171 billion from P43.523 billion.

Deposit in banks went up by 5.13 percent to P809.664 billion from P770.091 billion. Total banks’ cash and due, in the meantime, stood at P1.295 trillion, down by 36.45 percent from same time last year of P2.038 trillion.

The banking system’s trust accountabilities include unit investment trust funds (UITF), employee benefit, pre-need and personal trust, as well as agency trust and other fiduciary services.

As of end-September, UITFs totaled P473.644 billion, down by 24.32 percent from P625.941 billion same time last year. Pre-need trusts also fell by 2.03 percent to P76.068 billion from P77.644 billion.

Trust assets are invested in debt and equity securities and most of these investments are booked as financial assets held-for-trading and available-for-sale.

Last month in an amended rule, the BSP changed a provision in the “Basic Standards in the Administration of Trust, Other Fiduciary Accounts (TOFAI and Investment Management Accounts (lMA)” for clients referred to as “conservative.”

According to BSP Circular No. 1020, trust entities “may already invest their existing money market UlTFs for conservative clients in securities issued by the National Government” but with conditions.

By BSP description, a conservative client is one who wants an investment strategy where the primary goal is to prevent the loss of principal, and where the client prefers investment grade and highly liquid assets, government securities, Republic of the Philippines’ bonds, deposits with local banks/branches of foreign banks operating in the Philippines, and/or deposits with financial institutions in any foreign country, said the BSP. Investment grade credit rating should come from a reputable international credit rating agency.