MANILA, Philippines - Earnings of rural and cooperative banks fell 16.8 percent to P1.64 billion in the first half from P1.97 billion in the same period last year amid the consolidation in the industry and the exit of weak players, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The interest income of rural and cooperative banks fell 19.8 percent to P9.84 billion in the first six months from P12.27 billion in the same period last year.
On the other hand, interest expense plunged 29.5 percent to P2.01 billion from P2.85 billion.
Non-interest income reached P2.91 billion from January to June, 3.3 percent lower compared to P3.01 billion a year ago due to lower dividend, fees and commissions income; lower profits from foreign exchange operations; and lower gains on financial assets and liabilities held for trading.
The number of rural and cooperative banks was reduced by 26 to 532 in the first half from 558 in the same period last year amid the consolidation of players as well as the exit of weaker players in the banking system.
The BSP has closed down 10 rural banks this year. These are the Community Bank (Rural Bank of San Alfonso) Inc., Community Rural Bank of Magsaysay (Davao del Sur) Inc., Rural Bank of Labrador (Pangasinan) Inc., Rural Bank of Magsingal (Ilocos Sur) Inc., Rural Bank of Pres. Roxas (North Cotabato) Inc., Rural Bank of Sta. Magdalena (Sorsogon) Inc., Siargao Bank (A Rural Bank) Inc., Surigaonon Rural Banking Corp., Farmer’s Rural Bank Inc. in Batangas, and Xavier-Punla Rural Bank Inc.
The BSP has offered more incentives as well as financial package to encourage mergers and consolidations among rural banks through the Consolidation Program for Rural Banks (CPRB).
The BSP, the Philippine Deposit Insurance Corp. (PDIC), and Landbank conceptualized the program wherein the Countryside Financial Institutions Enhancement Program (CFIEP) has set aside P25 million to support the financial advisory, business process improvement, and capacity-building support services.