THE Philippine banking industry posted higher earnings in the first quarter as stronger lending activities boosted interest income, helping offset higher provisions for potential credit losses amid lingering global uncertainties.
Latest Bangko Sentral ng Pilipinas (BSP) data showed that the banking system’s net profit rose by 2.9 percent to P104.82 billion from P101.90 billion a year earlier.
The increase came as total operating income climbed by 10 percent to P370.70 billion from P336.90 billion.
Banks continued to benefit from core lending operations, with net interest income — the difference between earnings from loans and investments and interest paid on deposits and borrowings — increasing by 12.4 percent to P310.59 billion from P276.23 billion.
Interest income alone grew by 7.9 percent to P427.41 billion from P395.99 billion, reflecting sustained expansion in lending activities despite elevated borrowing costs.
Interest expenses, on the other hand, fell by 2.9 percent to P116.05 billion from P119.32 billion.
Trading income rebounded sharply to P6.22 billion from a loss of P1.17 billion a year ago, mainly due to gains from mark-to-market valuations that swung to P7.97 billion from P2.74 billion in losses.
Foreign exchange operations remained weak, with banks posting a loss of P7.71 billion, reversing from the year-earlier gain of P6.40 billion.
Non-interest income overall slipped by 0.9 percent to P60.11 billion from P60.67 billion.
Despite stronger revenues, banks continued to set aside larger buffers against possible risks. Losses and recoveries on financial assets widened by 45.8 percent to P43.49 billion from P29.83 billion.
In particular, provisions for credit losses on loans and other financial assets rose by 36.5 percent to P47.64 billion from P34.89 billion.
Meanwhile, non-interest expenses rose by 8.8 percent to P207.73 billion from P191.06 billion, driven mainly by higher compensation and fringe benefits, which increased by 10.2 percent to P67.10 billion.
Net profit before tax and before minority interest rose by 4.1 percent to P128.54 billion from P123.45 billion a year ago.
The central bank has said that the local banking system remained resilient despite the war in the Middle East as they had limited direct exposure and were well-positioned to absorb external shocks.
“Banks’ strong capital and liquidity positions, diversified funding bases, and proactive risk management practices provide cushions against these external spillovers, supporting overall system resilience amid heightened global uncertainty,” the BSP said.
