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Economic Contribution February 15, 2018

Universal, commercial banks book higher earnings

BIG BANKS booked higher incomes in 2017 amid robust lending growth which offset lower trading gains, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

Universal and commercial banks operating in the country raked in a cumulative P146.33 billion in net profits last year, up by 6.8% from the P136.956 billion they made in 2016, according to preliminary central bank data.

Net interest income surged by 17.3% at end-December to reach P369.383 billion, improving from the P314.878 billion drawn from lending activities. Big banks granted a total of P7.867-trillion loans last year, 17.3% higher than the P6.706-trillion credit lines handed out in 2016.

Of this amount, soured debts totalled P97.531 billion to post a slight rise from P93.801 billion a year ago. Still, its share to total loans declined to 1.24% from 1.4% the prior year.

Deposits held by big players reached P10.614 billion, an 11.9% increase from end-2016.

Meanwhile, non-interest income netted P121.844 billion, slipping by 5.4% from the P128.857 billion generated the previous year. The decline came as trading income plunged by 28.3% to just P36.053 billion, coming from P50.285 billion booked in 2016.

In particular, gains realized from foreign exchange transactions stood at just P3.928 billion, just a third of the P11.447 billion which the banks made from currency fluctuations the previous year.

The peso depreciated by 5.78% versus the dollar in 2017. The local unit averaged at P50.4037 against the greenback last year, touching 11-year-lows as it traded above P51.

On the other hand, operating costs grew at a more modest 11.4% rate to P311.774 billion, coming from P279.866 billion they spent a year prior.

Across the entire banking system, preliminary BSP data showed that Philippine lenders booked a cumulative P167.734 billion in net income in 2017, up by 8.7% from P154.31 billion.

Systemwide loans reached P8.863 trillion, with non-performing debts accounting for just 1.72% of the total at P152.655 billion. The ratio improved from the 1.89% ratio posted in 2016, which meant that banks maintained a healthier asset profile.