Philippines banks keep profit streak in 9 months

Net income up 4.2% to P315.5 billion

MANILA, Philippines — Philippine banks’ combined net income increased by 4.2 percent to P315.47 billion from January to September, as stronger interest earnings were partly offset by foreign exchange losses and higher provisions for potential bad loans.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that industry profits rose from P302.62 billion in the same period last year, an increase of P12.85 billion.

The industry’s total operating income grew by 10.2 percent to P1.16 trillion from P1.05 trillion, supported mainly by higher earnings from lending and other interest-bearing assets.

Net interest income, or the difference between interest earned on loans and investments and interest paid on deposits and borrowings, also climbed by 13.5 percent to P979.09 billion from P862.44 billion.

Interest income expanded by 9.8 percent to P1.34 trillion, while interest expenses edged up by just 0.7 percent to P356.35 billion.

However, non-interest income, which includes service fees, trading gains and other revenue sources, declined by five percent to P178.09 billion from P187.39 billion.

The decline came as banks recorded P35.87 billion in foreign exchange losses, reversing the P9.06 billion in gains reported a year earlier.

This partly offset improvements in other income streams, with fees and commissions income rising by seven percent to P144.30 billion and trading income jumping to P31.43 billion.

On the cost side, non-interest expenses increased by 9.8 percent to P638.46 billion, reflecting higher personnel and administrative expenses.

Banks also provisioned P168.69 billion for credit losses on loans and other financial assets, a 24.8-percent jump from P135.16 billion a year ago. These are charges recognized to account for loans and other exposures that may not be fully repaid.

Meanwhile, the banking industry’s total assets reached P31.6 trillion as of end-September, 9.8 percent higher than the P28.78 trillion a year earlier.

Total assets represent the loans, investments, cash and other resources held by banks.

The industry’s gross loan portfolio expanded by 11.4 percent to P18.13 trillion, while deposit liabilities rose by 7.5 percent to P22.64 trillion, reflecting continued growth in banking activity despite the slower increase in profits.