Bank deposits rise 8.5% as of end-April

MANILA, Philippines - More and more Filipinos are saving in the formal banking sector as total bank deposits expanded 8.5 percent as of end-April this year, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

The BSP said bank deposits reached P3.7 trillion as of end-April or P300 billion higher than the P3.4 trillion booked as of end-April last year.

“The continued growth in deposits reflected sustained depositor confidence in the banking system,” the central bank stressed.

It added that savings and time deposits remained the primary sources of funds for banks. Savings deposits accounted for nearly half of the funding base.

Data showed that savings deposits grew 10.8 percent while demand deposits expanded 12.9 percent. Time deposits posted a moderate growth of 1.3 percent.

The increase in deposits in the first four months of the year resulted in a robust expansion of the total resources of the country’s banking sector. Assets of banks went up 8.4 percent to P7 trillion as of end-April.

Universal and commercial banks accounted for almost 90 percent of the total resources of the banking system while thrift, rural and cooperative banks cornered the remaining 10 percent.

“The increase could be traced to the growth in currency and deposits, indicative of the public’s continued trust in the banking sector,” the BSP said.

The central bank said the Philippine banking system remained stable as lending, deposits and profitability helped sustain the industry’s healthy growth.

The BSP said banks operating in the Philippines are adequately capitalized, exceeding the 10 percent capital adequacy ratio (CAR) of the BSP and the eight percent international standard under the Basel Accord.

Latest data showed that CAR of the banking system remained healthy at 16.02 percent on solo basis and 16.97 percent on a consolidated basis as of end-December 2010. Similarly, the Tier 1 capital ratios of the banking system remained high at 13.64 percent on a solo basis and 13.69 percent on a consolidated basis.

The banking system’s CAR hardly moved from the last quarter’s 16.04 percent on a solo basis and 16.97 percent on a consolidated basis.

The CAR is a ratio of a bank’s capital to its risk and the central bank tracks this indicator to ensure that banks have the capability to absorb a reasonable amount of loss and that they are complying with their statutory capital requirements.

The total number of banks operating in the Philippines was reduced by 33 to 746 in the first quarter of the year, from 779 in the same quarter last year as the bank regulator stepped up its campaign against problematic banks while major players in the banking industry continued to consolidate.

Data showed that the number of universal and commercial banks was steady at 38 while the number of thrift banks was also unchanged at 73. However, the number of rural banks decreased to 635 in the first three months of the year compared to 667 in the same period last year and 647 as of end-2010 due primarily to the closure of weaker banks.

The BSP reported that the number of branches of universal and commercial banks, thrift banks, and rural banks increased by 240 to 8,124 in the first quarter of the year from 7,884 in the same period in last year.