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Banks’ profits down 3.42% in Q1

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By Lee C. Chipongian

Lower trading gains pushed big banks’ net income lower at the end of the first quarter to P33.74 billion, down 3.42 percent compared to P34.94 billion it had in the same period last year.

Based on Bangko Sentral ng Pilipinas (BSP) data, the universal and commercial banks’ non-interest income decreased by 12.42 percent during the period to P27.4 billion from P31.29 billion. Non-interest income comes from banks’ securities trading, other service charges and other fees on deposits and transactions.

Income from lending and deposits, however, sustained growth for banks’ net interest profits, going up to P85.69 billion from P75.44 billion the year before, or an increase of 13.59 percent.

Total operating income, in the meantime, went up to P113.09 billion as of end-March from the same period last year of P106.73 billion as lending remains the primary business model of big banks.

More than 90 percent of total banking resources are with the large lenders. These are 41 big banks in total. Banks’ income comes from its deposits, non-core trading activities and other revenues-based transactions while savings and time deposits are also primary sources of fund.

The BSP reiterated that the Basel 3-compliant banking system has increased its resilience to adverse shocks by strengthening its capital position and funding structure.

In a report in April, the BSP said the banking system or the core of the financial system, continue to be stable “as manifested by improved asset quality, ample liquidity, sufficient capitalization and increased profitability, together with expansion in assets, loan portfolio and deposits” in 2016.

Specifically, banks reported a decline in non-performing loan ratio to 1.9 percent and a strong capital adequacy ratio of 15.4 percent as of end-September 2016.

In terms of total assets, the Henry Sy-controlled BDO Unibank, Inc. is still the country’s biggest lender with P2.19 trillion as of end-2016 followed by Metropolitan Bank and Trust Co. with P1.55 trillion and Bank of the Philippine Islands with P1.45 trillion.

Government-owned Land Bank of the Philippines is the fourth largest with P1.39 trillion worth of assets while Philippine National Bank had P711.28 billion as of end-2016.

The top 10 banks also include Security Bank Corp., China Banking Corp., Development Bank of the Philippines, Union Bank of the Philippines and Rizal Commercial Banking Corp.

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