MANILA, Philippines — Earnings of Philippine banks climbed by 6.4 percent to P178.83 billion last year from P168.07 billion in 2017 on the back of higher trading gains and interest income, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).
Total operating income of the banking industry booked a double-digit growth of 12 percent to P660.22 billion in 2018 from P590.78 billion in 2017 as interest earnings jumped by 22 percent to P701.09 billion from P574.65 billion, while interest expense zoomed 49.7 percent to P190.03 billion from P126.88 billion.
This translated to a 13.9 percent rise in net interest income to P509.73 billion last year from P447.4 billion in 2017.
On the other hand, non-interest income inched up five percent to P150.49 billion from P143.38 billion as earnings from fees and commissions climbed by seven percent to P90.65 billion from P84.77 billion.
Data showed the trading income of Philippine banks inched up three percent to P41.76 billion from P40.54 billion as foreign exchange profits went up 27.1 percent to P9.1 billion from P7.16 billion, while realized gains from foreign exchange transactions plunged by nearly 67 percent to P1.33 billion from P3.99 billion.
The peso emerged as the third worst performing currency in the region after the Indian rupee and Indonesian rupiah, shedding 5.3 percent to close 2018 at 52.58 to $1 from 49.93 to $1 in 2017.
Unrealized gains from marking-to-market of securities reached P11.96 billion, reversing the losses of P4.24 billion in 2017, while losses from the sale or redemption of securities reached P2.89 billion, reversing the 2017 gains of P11.32 billion.
Non-interest expenses of banks including compensation and fringe benefits, taxes and licenses, fees and commissions, administrative expenses, among others rose by 12.6 percent to P425.95 billion from P378.16 billion.
Profits of universal and commercial banks or big banks went up 9.3 percent to P159.93 billion from P146.33 billion in 2017, while earnings of thrift banks or mid-sized banks slipped 11.7 percent to P15.83 billion from P17.94 billion.
In a speech read by BSP Deputy Governor Chuchi Fonacier during the 2019 Annual Reception for the Banking Community, BSP Governor Nestor Espenilla Jr. noted the consistently sound and stable condition of the Philippine banking system amid prudent regulation and risk-based supervision.
Espenilla said assets of the Philippine banking system continued to expand to P16.4 trillion by end-November 2018, attributed mainly to deposit growth that were deployed to lending for productive activities.
“Loan quality remains satisfactory as banks continue to adhere to sound credit underwriting standards. Meanwhile, capitalization continues to build up, with capital ratios remaining well above national and international thresholds,” he said.