Bank deposits rise 6.25% to P3.4 trillion in first half

MANILA, Philippines - Filipinos are able to save more on the back of the stronger-than-expected economic growth resulting in a 6.25 percent rise in bank deposits in the first semester of the year, data released by the Bangko Sentral ng Pilipinas (BSP) showed over the weekend.

The central bank reported that bank deposits reached P3.4 trillion as of end-June this year or P200 billion higher than a year-ago level of P3.2 trillion as Filipinos opted to park their extra cash in banks.

“The growth in deposits was indicative of sustained depositor confidence in the banking system,” the BSP stated in the Report on Economic and Financial Development for the second quarter of 2010.

The BSP added that savings and demand deposits grew in double-digit levels and remained the main sources of funds for universal and commercial banks.

Data showed that savings deposits went up by 13.1 percent and accounted for nearly 50 percent of the funding base while demand deposits or checking accounts increased by 17.1 percent.

On the other hand, the BSP said time deposits declined by 1.9 percent as of end-June this year.

This resulted in a robust expansion of the total assets of the country’s banking sector that increased by 8.7 percent to P6.6 trillion as of end-June this year from P6.1 trillion as of end-June last year. Universal and commercial banks accounted for almost 90 percent of the total assets of the banking system.

“The increase was led by the growth in currency and deposits, an indication of the public’s continued confidence in the banking sector,” the BSP added.

Earlier, BSP Governor Amando Tetangco Jr. said the resources of the local banking sector continued to expand through sustained growth in deposits.

“Our banking system is resilient, sound and stable. The key challenge for our banks is to preserve this growth momentum. In this, there should be no room for complacency,” Tetangco said.

Data showed that bank lending growth hit a 13-month high of 11.7 percent to P2.15 trillion as of end-July this year from P1.93 billion as of end-July last year. 

The BSP chief also cited that the capitalization or capital adequacy ratio of the Philippine banking sector reached 14.8 percent on a solo basis and 15.8 percent on a consolidated basis as of end-December. The industry’s CAR continued to exceed both the statutory level set by the BSP at 10 percent and the international standard of eight percent.

The banking industry’s CAR, according to the BSP, was higher than Thailand’s 15.7 percent, Malaysia’s 15 percent, and Korea’s 14.6 percent. Indonesia had the highest CAR in the region with 19.2 percent.

The number of banks in the country declined by 31 to 773 in the first half of the year from 804 in the same period last year indicating the continued consolidation of banks as well as the exit of weaker players. Data showed that the number of universal and commercial banks was steady at 38 while the number of thrift banks was also unchanged at 74.

However, the number of rural banks fell to 661 from January to June this year compared to 692 in the same period last year due primarily to the closure of several banks including several banks under the controversial Legacy Group.

The BSP reported that the number of branches of universal and commercial banks, thrift banks, and rural banks increased by 765 to 8,663 in the first semester of the year from 7,898 in the same period last year.