Banking system’s net income up at end-March amid boost from rates

THE PHILIPPINE banking industry’s net profit rose by 2.95% year on year in the first quarter on the back of a high interest rate environment, which helped offset a decline in non-interest income, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The net income of the country’s banking system increased to P92.107 billion at end-March from P89.47 billion in the same period a year ago.

Net interest income jumped by 16.36% year on year to P247.408 billion in the first quarter from P212.62 billion.

Banks’ interest income climbed by 21.9% to P356.429 billion in the period from P292.404 billion a year prior as interest rates remained elevated.

Meanwhile, interest expense rose by a faster 36.72% to P108.864 billion in the first quarter from P79.627 billion a year ago.

The BSP has kept its policy rate at a near 17-year high of 6.5% following cumulative hikes worth 450 basis points from May 2022 to October 2023 to help tame red-hot inflation.

On the other hand, lenders’ non-interest income declined by 11.75% year on year to P52.983 billion in the period from P60.034 billion.

This came as earnings from fees and commissions increased by 8.85% to P37.421 billion from P34.377 billion.

Meanwhile, trading income plunged by 68.93% to P1.498 billion in the quarter from P4.822 billion in the comparable year-ago period.

The sector’s non-interest expenses stood at P168.95 billion at end-March, up by 10.34% from the P153.12 billion in the same period in 2023.

The industry’s losses on financial assets widened by 28.72% to P21.806 billion in the first quarter from P16.941 billion a year prior.

Provisions for credit losses increased by 29.35% to P25.11 billion from P19.413 billion, while bad debts written off grew by over five times to P725.961 million from P139.311 million. — L.M.J.C. Jocson