Peso deposits climb 7.3%

MANILA, Philippines - Filipinos remained confident about the country’s banking system as deposits rose 7.3 percent in January amid the closure of weak players in the industry as evidenced by the recent closure of the Export and Industry Bank (EIB).

Data released by the Bangko Sentral ng Pilipinas (BSP) in its first quarter 2012 Inflation Report showed that peso-denominated deposits of banks reached P3.9 trillion as of end-January or about P200 billion higher than the P3.7-trillion deposits booked in end-January last year.

 “The sustained increase in deposits reflected depositors’ continued confidence in the banking system,” the BSP stated in the report.

It pointed out that savings deposits grew by 8.3 percent and remained the primary source of funds for banks accounting for nearly half of the funding base.

The central bank added that demand or checking accounts grew by 9.5 percent while time deposits expanded by 3.3 percent.

As a result, total resources of banks operating in the Philippines climbed 6.3 percent to P7.441 trillion in end-January from P6.998 trillion as the banking industry continued to face the spillovers of the sovereign debt crisis in Europe as well as economic uncertainties in the US.

Resources of universal and commercial banks rose 7.3 percent to P6.661 trillion in end-January from a year-ago level of P6.207 trillion. Universal and commercial banks accounted for 89.5 percent of the country’s total banking assets.

Assets of thrift, savings, and mortgage banks retreated by 2.5 percent to P594 billion as of end-January from P609.34 billion in end-January last year while resources improved by 2.2 percent to reach P185.64 billion in end-January from a year-ago level of P181.66 billion.

Last year, PDIC took over 29 banks as more problematic banks were ordered closed by the Bangko Sentral ng Pilipinas (BSP). The number of banks taken over by PDIC last year was four more than the 25 banks placed under the receivership of the government-owned deposit insurer in 2010.

The list of banks ordered closed by the BSP last year was led by the Aguirre-controlled Banco Filipino Savings and Mortgage Bank last March and LBC Development Bank of the Araneta clan last September.

Just last month, the BSP ordered the closure of EIB and was placed under the receivership of the state-run Philippine Deposit Insurance Corp. (PDIC) as mandated under Section 30 of Republic Act 7653 or the New Central Bank Act of 1993 as it is unable to service its maturing deposit amounting to at least P700 million.

As early as 2010, EIB has committed to sell its core banking business to Banco de oro Unibank Inc. of retail magnate Henry Sy but the transaction has yet to get a final approval from the BSP. Furthermore, the country’s largest bank decided to abandon the plan due to several issues including pending cases against the bank.

EIB has over 50,000 depositors with deposits amounting to over P15 billion. It has a nationwide network of 50 branches and 47 automated teller machines (ATMs).