PHL banks' resources totaled P6.7T as of end-Sept.

The confidence of the public in the country's financial system drove the banking sector’s resources to grow 8 percent in January-September 2010, the central bank said Wednesday. The banking sector's total resources reached P6.7 trillion as of end-September last year from P6.2 trillion as of the same period in 2009, the Bangko Sentral ng Pilipinas (BSP) said in its "Report on Economic and Financial Developments" for the third quarter last year. "The increase was due largely to the growth in currency and deposits, indicative of the public's continued confidence in the banking sector," the BSP noted. Industry statistics revealed that assets of universal and commercial banks accounted for about 90 percent of the sector’s resources, while assets of thrift, savings, and rural banks amounted to 10 percent of the total. The central bank said total bank deposits rose 12.5 percent to P3.6 trillion in January-September from P3.2 trillion in the same 2009 period. Time deposits increased by 12.1 percent, followed by demand deposits (11.4 percent) and savings deposits (8.7 percent), the BSP said. "Savings and time deposits remained the main sources of funds for banks. The growth in deposits reflected sustained depositor confidence in the banking system," the central bank said. Deposits, lending, and profitability posted healthy growth rates in January-September, BSP Gov. Amando Tetangco Jr. told journalists on Tuesday. "The banking system continued to be stable and remained effective in intermediating credit to the productive sectors of the economy," he said. According to the central bank chief, Philippine banks kept their capital levels substantially above international standards because major players in the banking industry raised fresh equity via issuance of various debt instruments. The capital adequacy ratio (CAR) of banks remained healthy at 15.23 percent on solo basis and 16.21 percent on consolidated basis as of the third quarter of 2010 from 14.9 percent on solo basis and 15.95 percent on consolidated basis during the second quarter of 2010. The levels continued to surpass the BSP's minimum requirement of 10 percent and international benchmark ratio of 8 percent. The BSP monitors CAR — the ratio of a bank's capital to its risk — to ensure banks have the capability to absorb a reasonable amount of loss and that they are complying with their statutory capital requirements. The central bank believes that tighter capitalization standards implemented this year for major players in the banking industry would further strengthen the country's financial sector. The new rules or guidelines were supposed to take effect early last year but monetary authorities agreed to give banks more time to comply and beef up their capitalization. The number of banks in the country dropped to 773 in the first half of last year from 804 in the same period in 2009 due to the continued consolidation of banks and the exit of weaker players. The number of universal and commercial banks and thrift banks remained unchanged at 38 and 74, respectively. Meanwhile, the number of rural banks stood at 661. — JE/VS, GMANews.TV