DEPOSITS in the country grew to double digits in the first half of 2018, compared to its level last year, driving the expansion in the banking industry’s assets for the period.
Data from the Bangko Sentral ng Pilipinas (BSP) showed deposits grew 10.3 percent in the first semester to hit P12.15 trillion.
Based on the maiden banking sector outlook survey earlier released, this is expected to continue as bankers see deposits growing between 10 and 20 percent in the next two years.
Deposits during the first half of the year were mostly peso-denominated and sourced mainly from resident individuals and private corporations.
In particular, resident individuals have a 47.7-percent share of the total deposits for the period, followed by private corporations with a 32.5-percent share of the P12.15-trillion deposits during the period. The government, meanwhile, accounted for 13.1 percent of the total deposits for the first half; the trust department’s share is at 4.5 percent.
“This broadly indicates a stable funding source for the banking system,” the BSP said.
By type of deposits, savings deposits grew by 8.1 percent and was still the biggest source of banks’ total deposits, with a share of 47.2 percent as of end-June 2018.
“This type of deposits is considered inherently stable as it is not particularly sensitive to adverse changes in the bank’s profile,” the BSP said.
Meanwhile, time certificate of deposits rose 10.2 percent, demand deposit grew 13.2 percent and Long Term Negotiable Certificate of Deposit (LTNCDs) registered an expansion of 40.9 percent.
“The double-digit growth in demand and time deposits may be attributed to the reduction in reserve requirement ratios by 200 basis points starting March 2018,” the BSP said.
Bank deposits—or the money placed by bank customers in banking institutions for safekeeping—provide the funding base and serve as major determinant of domestic credit extended to the rest of the economy.
These deposits are at the core of banks’ financial intermediation functions.