MANILA—The Philippines banking system continues to prove its strength after ending 2016 with Php 154.13 billion net profit, up 13.9 percent from Php 135.34 Billion in 2015.
Bangko Sentral ng Pilipinas (BSP) data show that the sector posted a total operating income of Php 533.13 billion last year, Php 53.46 billion more than the Php 479.67 billion in the previous year.
Fees and commission income registered the highest amount under the non-interest income at Php 75.2 billion; followed by trading income, Php 54.24 billion; and profit from the sale or redemption of non-trading financial assets and liabilities, Php 25.41 billion.
In 2015, income from fees and commission amounted to Php 70.9 billion; trading income, Php 40.8 billion; and gains from sale/redemption of non-trading financial assets and liabilities, Php 17.2 billion.
Net interest income last year rose to Php 384.7 billion from Php 349.1 billion.
Debt raters cited the Philippine banking system as among the most resilient in the world given the reform measures the BSP has put in place in the past years.
On Feb. 8, Fitch Ratings affirmed its ratings on eight Philippine-based banks, including two government financial institutions, on continued improvement of asset quality and profitability.
Banks that are covered by the debt rater’s latest action are government-owned Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP), which both have ‘BB+’ long-term issuer default ratings (IDRs), with positive outlook;
Private banks included in the same affirmation are Ayala-led Bank of the Philippine Island (BPI) ‘BBB-’; Sy-led Banco de Oro Unibank Inc. (BDO), ‘BBB-’; Ty-led Metropolitan Bank & Trust Company (Metrobank), ‘BBB-’; Henry Sy’s China Banking Corporation (ChinaBank), ‘BB+’; Tan-led Philippine National Bank (PNB), ‘BB+’; and Yuchengco-led Rizal Commercial Banking Corporation (RCBC), ‘BB+’. Outlook on all these ratings is Stable.
Fitch said its decision on DBP and LBP reflects the debt rater’s “expectation of extraordinary sovereign support for both banks in times of need.”
”Fitch believes that the sovereign would have a strong propensity to provide extraordinary support to DBP and LBP, if needed, given their full government ownership and policy mandate,” it said.
It explained that “probability of state support is assessed to be moderate overall, taking into account the sovereign’s financial strength.”
The affirmation on BPI, BDO and Metrobank “reflect(s) their strong domestic franchises, diverse revenue streams and adequate risk-management frameworks, which help to underpin their steady asset quality, above-average profitability and healthy balance sheet buffers.”
For PNB, RCBC and Chinabank, Fitch said the three banks “have generally shown a greater appetite for growth in recent years as they seek to gain scale and share.”
”But Fitch expects that they will display broadly stable asset quality and profitability backed by acceptable risk controls as they grow.”
Fitch also expects the banks to benefit from the positive outlook the credit rater have for the Philippine economy for the next two years due to resiliency of domestic consumption and strong investment growth.