RETAIL BANKING | Cesar Tordesillas, Philippines

Top Philippine banks post 19% increase in earnings

The Philippines' big banks pushed their net earnings up 18.68 percent in the first six months to P55.152 billion.

The 38 universal and commercial banks bucked the odds amid worries of financial woes in the eurozone and reduced margins due to the low interest rate environment.

From January to June, the BSP said big banks’ net interest income increased 3.2 percent to P99.065 billion from what was reported the same period last year, while non-interest income also rose 13.41 percent to P64.414 billion.

As of the end of the first semester, the banks’ total interest income amounted to P143.983 billion from P141.997 billion in June 2011, while interest income totaled P44.806 billion from last year’s P45.897 billion.

BSP Deputy Governor Diwa C. Guinigundo has said that the BSP helps by reviewing policies to reduce intermediation costs such as on the reserve requirements.

Addressing these issues now may discourage banks to indulge in riskier behavior to ensure profitability will not decline, said Guinigundo. “The banks continue to be profitable but still, this (lower rates’ impact on margins) is something that we are closely monitoring and one of the reasons the BSP continues to look at ways to address the issue of financial intermediation cost.” A future review of reserve requirements, he said, will “provoke better intermediation for the banks.”

Intermediation costs include not only GRT but also agrarian credit to small enterprises, yield on compliance to agrarian required credit to SMEs and reserve requirement.

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