Bank earnings up 31.4% to P91.2B

MANILA, Philippines - Earnings of the Philippine banking system went up by 31.4 percent in 2010 on the back of the industry’s strong interest and non-interest income, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The BSP said in its latest Status Report on the Philippine Financial System that the industry’s net profit hit a record high of P91.2 billion last year or P21.8 billion more than the P69.4 billion earnings booked in 2009.

“Sustained implementation of key financial sector reforms together with the improving macroeconomic environment augered well for the financial system during the year in review,” the report stated.

The increased profitability of the banking industry was traced to the brisk trading activities of derivatives and government securities on top of sustained growth in lending-related revenues.

Data showed that the industry’s total operating income increased 12.9 percent to P356.9 billion in 2010 from P316.1 billion in 2009 after interest income increased 6.7 percent to P223.9 billion from P209.8 billion while non-interest income surged 25.2 percent to P133 billion from P106.2 billion.

On the other hand, non-interest expenses inched up by 8.9 percent to P227.5 billion from P208.9 billion. Losses or recoveries on financial assets increased at a slower pace of 2.8 percent to P29.4 billion from P28.6 billion.

The BSP said the resilience of the Philippine banking system received favorable third party validation from the International Monetary Fund (IMF) and international credit watchers following an upgrade in sovereign ratings from Standard & Poor’s last November and Moody’s Investor Service last January.

“While fragilities remain in the Western Hemisphere particularly in the Euro area where there is a prevailing negative interaction between sovereign and banking risks, the Philippine financial system emerged from the 2008 global financial crisis in reasonable shape and continues to build on its current position of stength to withstand future external and internal shocks to the economy,” the BSP added.

Total assets of universal, commercial, thrift, rural, and cooperative banks operating in the Philippines went up by 11.6 percent to P6.91 trillion last year from P6.19 trillion in 2009 as bank loans increased by 8.7 percent to P2.65 trillion from P2.43 trillion while financial assets other than loans inched up by 8.8 percent to P1.73 trillion from P1.59 trillion.