CHAMBER of Thrift Banks (CTB) President Cecilio D. San Pedro is expecting the double-digit growth in assets, deposits, and loans seen by thrift banks in the first half to be sustained until the end of the year.
“As reported by the central bank governor, we are on the rise. We have a modest gain in both the assets and liabilities side, deposit-taking, [and] we’re [also] growing the MSME (micro, small, and medium enterprises) loans,” he said to reporters on Friday.
Based on data from the Bangko Sentral ng Pilipinas (BSP), the thrift banking industry’s first-half net income grew by 27.1% year on year to P9.83 billion.
BSP Deputy Governor Chuchi G. Fonacier noted in a video message on Friday that the industry’s net profit growth had exceeded the pre-pandemic compounded annual growth rate, which averaged 5.3%.
The growth translated into a return on assets and return on equity at 2% and 12.8%, respectively, or higher than the 1.3% and 9.3% posted a year ago.
The industry’s net interest margin improved to 7.1% at the end of June from 6.2% a year ago.
Ms. Fonacier noted the latest margin was above the pre-pandemic range of between 5.4% and 5.8%.
The sector’s gross loan portfolio rose year on year by 14.1% to P647.7 billion as of end-June, mainly driven by the household sector.
Ms. Fonacier noted significant growth in salary-based, general-purpose consumption loans, and motor vehicle loans, which grew by 44.3% and 8.5%, respectively.
Loans to other sectors such as real estate, manufacturing, and wholesale and retail trade also rose year on year by 3.2%, 15.3%, and 2.3%, respectively.
Thrift banks’ nonperforming loan (NPL) ratio stood at 7.2% as of end-June, easing from the 7.8% reported a year ago. Meanwhile, NPL coverage ratio was higher at 63.4% from 63.2%.
On the funding side, deposits grew by 1.1% year on year to P717.2 billion.
“These figures suggest that thrift banks continue to enjoy the confidence of depositors and point to room for the thrift bank industry to grow further,” Ms. Fonacier said.
As a result, the consolidated assets of thrift banks grew by 2.2% to P949.7 billion in end-June.
In a panel discussion, BSP Assistant Governor Arifa A. Ala said it is unlikely that the reserve requirement ratio (RRR) for thrift banks will be cut from the current 2%.
She said at this point, the central bank does not see yet the need to further cut the reserve requirement, which she said “is quite low at 2% already.”
However, Ms. Ala said the BSP could consider cutting the RRR depending on the outlook for growth and inflation.
In June, the Monetary Board cut the reserve ratio for thrift banks by 100 basis points (bps) to 2%.
The RRR for big banks and nonbank financial institutions with quasi-banking functions were also cut by 250 bps to 9.5%,
For digital banks, the RRR was cut by 200 bps to 6%, and by 100 bps to 1% for rural and cooperative banks. — Aaron Michael C. Sy