Second hand banks remain strong – Manila Bulletin

The 48 savings banks supervised by the central bank remain stable amid the COVID-19 pandemic despite declining deposits and portfolio, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

“During the first half of 2020, we noticed a decrease in assets, loans and deposits from savings banks. This is due to the economic slowdown and the consolidation of two subsidiary savings banks with the parent banks ”, said Diokno during his virtual“ GBED Talks ”.

In July 2019 and in March this year, RCBC Savings Bank and PNB Savings Bank merged with their respective parent banks, Rizal Commercial Banking Corp. and Philippine National Bank.

According to Diokno, the latest bank savings data shows a healthy capital adequacy ratio (CAR) and liquidity buffers, as well as “satisfactory profitability and asset quality.”

He said that the industry amid the public health crisis “remains stable and continues to support the financial needs of the economy.”

“In fact, the total loan portfolio of savings banks reached 789,000 million pesos at the end of June 2020. Loans were diversified in all economic sectors, with the household and individual sector being the ones that had the higher proportion of loans. Lending activities were financed primarily by deposits amounting to P857.5 billion at the end of June this year, ”Diokno said.

In the same period, the sector’s bad loan ratio is better at 5.7 percent and the provision for credit losses increased, resulting in a higher non-performing loan coverage ratio of 60.4 percent vs. to 48.1 percent at the end of 2019.

Also at the end of June, the accumulated net profit of savings banks was P6.5 billion, although less than P7.7 billion at the same time in 2019.

“The second-hand banks were well capitalized,” Diokno said. The CAR of subsidiary savings banks was at 16.1 percent at the end of March this year, while independent savings banks had 18.7 percent, both above the 10 percent requirement.

“The industry maintained sufficient reserves to meet liquidity and financing requirements,” Diokno said. Independent banks exceeded the 20 percent minimum liquidity ratio by 32.6 percent at the end of 2019.

While satisfied with the stable condition of the savings banks, the head of BSP said they remain vigilant. “The BSP continues to monitor developments and is ready to implement its full range of prudential policy tools and monetary instruments to safeguard the stability of the financial system,” he said.

At the end of August, the 48 savings banks operated a network of 2,613 branches.