BSP: Post-crisis PHL banks strong and able

The Philippine financial system proved resilient in the second semester of 2010 as it came out of the global financial crisis strong and able, a Bangko Sentral ng Pilipinas (BSP) report said Monday. Banks remained profitable for the second half of 2010 as the industry posted a P91.2 billion net profit, 31.4 percent higher than the previous year's figures, it added. The BSP said this was due to the "brisk trading activities of derivatives and government securities on top of sustained growth in lending-related ventures." Total resources, in fact, gained 11.6 percent on the back of sustained growth in loans (8.7 percent) and financial assets other than loans (9.5 percent), it added. Core lending, meanwhile, continued to grow at a rate of 8.7 percent, while the non-performing loans/non-performing assets ratios of the banking system grew better than the minus 4-percent rate before the crisis. The BSP said there is also ample liquidity in the system, as the liquid-to-asset ratio proved resilient at 59.7 percent, up 7-percentage points from last year's figures. Deposit base, on the other hand, continued to expand to reach P5,122.2 billion, up 9.6 percent from 2009, "indicative of sustained depositor confidence in the banking system," the BSP claimed. The country's central bank said the Philippine banking system's figures were so good that it caught the attention of international monetary and credit rating agencies. "Such resilience received favorable third-party validation from the International Monetary Fund and international credit watchers following an upgrade in sovereign ratings from Standard & Poor's and in sovereign outlook from Moody's in 2010," it said. Flex regulatory muscles In order to sustain growth, the BSP advised regulators to renew focus on supervising financial conglomerates since majority of bank assets in the system "were controlled by banks belonging to a conglomerate, or a conglomerate itself." It said that the Financial Sector Forum, the inter-agency coordinating body of financial regulators, is flexing its regulatory muscles by doing a periodic updating of conglomerate maps and intensifying information exchange among the relevant agencies. "There is [also] a need to continually develop market niches and nurture the rural economy to provide flexibility in banks' core earning potential," it added. The BSP said the role of the small market players dispersed across the Philippine archipelago remains ever more crucial, especially in serving the interests of microfinance clients and beneficiaries of overseas Filipino workers, in an effort to "develop a truly inclusive financial system." There were 758 banks with 8,111 branches operating in the country by the end of 2010, of which 203 representing a total savings component of P3.2 billion were engaged in microfinance. — JM Tuazon/VS, GMA News